China: Kill or cure with interest-rate rise?

6th April 2011

But is it a measured response or is China's boom out of control?

Mindful Money blogger Shaun Richards says the rise means that the one-year  deposit rate is now 3.25 % and the one-year lending rate is 6.31 %, "and as there have now been four increases since the autumn of last year rates have now risen by a round 1%".

Richards says Chinese consumer price inflation level was 4.9% in February with a forecast for a 5.2% rise in March. "These compare to the official target of 4%." Richards also points out that "Chinese officials are so concerned about price rises that they recently persuaded Unilever not to raise prices in China."

The Telegraph reports the story here, quoting the view of Standard Chartered economist Jinny Yan that China had got a little bit behind the curve on inflation, but is now catching up.

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