The US Federal Reserve lowered interest rates by a half point on September 18 to limit the impact on the economy from the recent disorder in the housing and credit markets.
However, the US interest rates slash will not affect Chinese government's policy to raise its own interest rates and neither will it make it difficult for China to contain its inflationary pressure, said Wang Qing, chief economist for Morgan Stanley Greater China Region.
"As long as China's domestic inflation remains at a high level, China's central bank will continue to raise the interest rates despite the US action," said Wang.
Starting from 2006, the central bank's interest rate policy has shifted from stabilizing renminbi appreciation expectations to controlling domestic asset and commodity inflation risks, Wang pointed out. "The shift shows the government's confidence in managing its capital accounts and gives it certain flexibility in its money policies."
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(China.org.cn September 20, 2007)