China to raise rates 2 to 3 times in 2011: Govt think-tank
China is likely to raise interest rates two to three times in 2011, as policymakers strive to keep a lid on rising prices, a senior economist from a top government think-tank said on Friday.
January 07, 2011 / 19:27 IST
China is likely to raise interest rates two to three times in 2011, as policymakers strive to keep a lid on rising prices, a senior economist from a top government think-tank said on Friday.
Zhu Baoliang, the chief economist at the State Information Centre, said Chinese policymakers were not too worried about the impact of policy tightening on growth as the economy is on a solid footing."There is room for further interest rate rises. We think the central bank will raise rates two or three times this year and raise banks' reserve requirements further," he told Reuters.The central bank now normally raises rates in 25 basis point steps, meaning 2-3 rises would add up to 50-75 basis points in tightening."Economic growth in 2011 will be a little slower than last year, but 9% rate is achievable. We are facing less uncertainties compared with last year and 2009," Zhu said."But rising inflation in recent months has surprised us."Inflation, which raced to a 28-month high of 5.1% in November, will probably stay elevated in coming months before gradually losing steam towards the year-end, Zhu said.The People's Bank of China, which has raised interest rates twice and increased banks' reserve requirements six times since the start of last year, has promised to put the task of fighting inflation at the top of its 2011 agenda.The government's tough measures to clamp down on soaring food prices have achieved some results, but there are worrying signs that price rises are spreading beyond food, Zhu said.Market speculation is for December consumer inflation, to be announced later this month, to have eased to 4.3% to 4.5%, due mainly to a high base effect from a year ago. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
