at China’s central bank have agreed that higher interest rates could be
appropriate in the near future thanks to improvements in industrial
prices and enterprise profitability, according to state media.
State-run newspaper China Daily said on Monday that top researchers at
the People’s Bank of China had recently agreed that higher rates would
“help to squeeze asset bubbles and restrain debt expansion, as a tool to
be used with broader oversight of financial activities.”
The paper quoted Ji Min, deputy head of the bank’s research bureau, as
saying over the weekend that there “is room for an increase in interest
rates in the short term as industrial product prices and enterprises’
profitability have improved since last year”.
The state-run daily wrote that a possible hike in interest rates, “along
with the key lever of cutting the overcapacity of industrial producers,
would further improve producers’ investment returns by curbing debt
expansion regardless of the costs of borrowing, according to the
Yet China’s financial markets and corporations did not stomach the
PBoC’s rate hikes as well as their US counterparts last year, according
to Trinh Nguyen, Senior economist for emerging Asia at Natixis.
Ms Nguyen said in December that the Shanghai 3-month interbank lending
rate had “shot up to reflect tighter liquidity and counter-party risks
“Chinese stock indices (both Shenzhen and Shanghai) have under-performed
not just the US but also the Asia Pacific region due to tight monetary
conditions – our Natixis Monetary Condition Index shows that China is
amongst the tightest,” she wrote.
Monetary Condition Index)显示，中国属于最紧张之列，”她写道。
The PBoC last raised rates for its Medium-term Lending Facility and
reverse repos by five basis points on December 14 following an overnight
rise of 25 bps by the US Federal Reserve overnight.