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Report Predicts Interest Rate Hike This Year
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China's central bank will likely jack up interest rates once or twice this year, with rates expected to rise 0.27 percentage points each time, says a research report.


The report, released by the research department of the China Construction Bank, predicts China will maintain a GDP growth of about 10 percent this year, with inflation remaining low and Renminbi appreciating by some 5.5 percent.


The central bank is also expected to increase the required reserve ratio for commercial banks three or four times this year at a pace of 0.5 percentage points, says the report.


China's consumer price index, or CPI, rose 2.8 percent last December. Some analysts say the increase will force the central bank to raise interest rates.


Some disagree, however, saying rising inflation does not necessarily trigger a rise in interest rates.


Lu Wenlei, an analyst with the research section of the Shenyin-Wanguo Securities Co., Ltd, predicts the central bank will wait for other economic indicators before raising interest rates.


(Xinhua News Agency January 31, 2007)


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