China Financial Daily

Could the increase of China’s CPI in February trigger the increase of interest?
February CPI up 2.7%, it will trigger a rate hike?
11, National Bureau of Statistics released data show that in February consumer price (CPI) rose 2.7%, chain rose 1.2%. This means that negative interest rate era (CPI measure of inflation rose above the level of the one-year interest rate) approaches once again, in this context, inflation and possible overheating in the economy will birth a further contraction, such as interest rates have become the market of concern focus.

Experts in various fields have also argued for their own, the majority said that at present conditions are not met, the central bank will not raise interest rates immediately. Such as the Institute of Guotai Junan, chief economist Lee Thunder that, in theory, means to raise interest rates should be used now, but the “two sessions” to maintain an appropriate tone is still loose monetary policy, so the possibility of raising interest rates soon become smaller. And the international economic situation, instability, but also observed for several months. Is expected to lag the country will adopt the practice in the CPI to 3% then consider raising interest rates.

Tan is also well-known financial commentator leaves unequivocally opposed to raising interest rates. In her view, at this time should not be raising interest rates, while the need to continue raising the deposit reserve ratio. International predators are lurking around staring at their appreciation of the renminbi and increases in interest rates, so when the interest rate, succumb to external pressure, then the Chinese economy is extremely negative, equivalent to committing suicide.

In addition to these two kinds of reasons, the China Galaxy Securities chief economist Zuo Xiaolei also suggested that the current CPI level of a completely normal level, the actual inflation rate is very low, and the CPI rose more than a very small ring, the central bank is no need to add now interest. CASS Institute of Finance, Director of Financial Development, said Yi Xianrong, recent policy will not be too frequent adjustments in the second half could only raise interest rates.

In contrast, endorsed the rate increases now have no shortage, particularly in some well-known investment bank institutions. UBS economist Wang Tao in Beijing, believes that in February economic data will bring to market the upcoming rate hike expectations, interest rates should come quickly, not this month it should be early in the second quarter. Government interest rates was mainly in response to inflationary expectations.

Hong Kong-based economist Wang Qian JP Morgan Chase also said that inflation is the greatest danger to the economy, the government needs to control inflation expectations, and or in a few weeks, raising interest rates. Wang Qian predicted that China’s rate hike as early as this month, is expected to one-year deposit and lending interest rates will rise 0.27 percentage point.

In addition, Goldman Sachs Gao Hua and the gold in a recent report has also frequently mentioned the possibility of rate hikes. Previous reports of gold predicted to exceed expectations of macroeconomic data, 3,4 the month of yuan appreciation may start the year the dollar will be 3% ~ 5%.

In fact, the central bank Deputy Governor Su Ning has made it clear that during the two sessions, “control the supply of social capital, the central bank has a variety of monetary policy tools, such as the deposit reserve ratio, open market operations, but also interest rates, the central bank will be the most appropriate When using the most appropriate means to achieve our goals. ” But the question is whether now is the most appropriate time to raise interest rates? In my opinion, CPI rose 2.7%, seems can not take the “most appropriate” word.