The increase in China's consumer price index (CPI), the main
gauge of inflation, is likely to slow to 6.1 percent in September,
a report from Bank of China says.
The nation's CPI jumped 6.5 percent in August, the highest
monthly rise in 11 years, mainly due to food price hikes.
The slowdown in inflation would reduce the urgency to raise
interest rates by the People's Bank of China (PBC), or central
bank, Tuesday's Shanghai Securities News reported, citing
the report.
The PBC, however, may continue to raise the interest rates amid
efforts to bring the deposit rate into positive territory and curb
the high asset prices.
The report also stated that China's broad measure of money
supply, M2, which covers cash in circulation and all deposits, may
grow by 17.5 percent in September, lower than 18.09 percent in
August.
China International Capital Corp. (CICC) predicted in a report
that the CPI would slow in the fourth quarter after remaining high
in September and October.
The CICC also said the central bank may raise the interest rates
once or twice in the fourth quarter.
The Chinese authorities would allow faster appreciation of local
currency, raise the deposit reserve requirement ratio further,
conduct more open market operations and use administrative orders
to rein in bank loans growth and excess liquidity, according to the
CICC.
The PBOC has raised the deposit and lending rates five times and
the reserve requirement ratio, now at 12.5 percent, seven times,
each time by 0.5 percentage points, since the beginning of the
year.
(Xinhua News Agency October 9, 2007)
