China will not raise interest rates this week, People's Bank of
China governor Zhou Xiaochuan has said, amid speculation that
further monetary tightening measures would be taken to curb
inflation and prevent the economy from overheating.
The head of the central bank said he was satisfied with the
current interest rate level and the country does not need to adjust
interest rates too frequently, according to a report in China
Securities Journal published on Tuesday.
When asked about the possibility of an imminent interest rate
increase, he said that would not happen during the week of November
19.
However, the top banker would not rule out the possibility of
another interest rate hike in the long term, said the report.
"The interest rate level depends on the economic data," he said.
"Therefore we will watch future statistics closely."
Zhou's comments came in the midst of growing speculation that
the central bank would resort to the sixth interest rate increase
this year to curb inflation and prevent the world's fourth largest
economy from overheating.
In October, the Consumer Price Index (CPI) rebounded to an
11-year high of 6.5 percent. That doubles the official target of
three percent for 2007. The CPI growth for the whole of this year
might be around 4.5 percent, the central bank has estimated in a
report.
In the first three quarters of 2007, the country registered an
11.5 percent growth in Gross Domestic Product (GDP) on rapid
expansion in credit and investment.
The rise in the cost of living in China has sparked fears across
the Pacific, as that might eventually result in accelerating
inflation in the United States.
Surging food costs in China could drive wages higher, before
pushing China into a broad inflationary spiral, the US-based
Investors Business Daily quoted some economists as
saying.
That would lead to higher prices for Chinese exports and then
lead to inflation in the US, which was the second largest
destination for Chinese exports after the European Union.
America's October import costs from China rose 2.2 percent, the
biggest yearly gain since surveys began in 2004, according to the
report. Import prices from China have climbed a record five months
in a row.
(China Daily November 21, 2007)
