CHINA / National
Official: No decision made on interests rate rise
(Xinhua)
Updated: 2006-07-18 14:41
A Chinese official said in Beijing Tuesday that the central government
has not yet decided whether to increase interests rate in the third
quarter of this year since the government is still waiting to see effects
of the latest stringent monetary policy.
Zheng Jingping, spokesman with the National Bureau of Statistics (NBS),
told a press conference in Beijing that a series of macro control
measures have been launched by the government in the past months, such as
the central bank's raising of the benchmark lending rates by 27 basis
points in late April and the recent hike of reserve ratio for commercial
banks by 0.5 percentage points.
"The macro control policies are showing their effects step by step, but
we need to further observe the market before launching new decisions for
further control measures, since some policies have been in operation even
less than one month," said Zheng.
Zheng admitted that the rapid growth of money supply and lending has been
a major problem in China's economic growth, and a stringent monetary
policy must be adopted by the government to ease the soaring investment
and lending.
China's economy surged a year-on-year 10.9 percent in the first half of
2006, roaring ahead despite a slew of measures imposed by the government
to ease investment growth.
An economic report released last Tuesday by the institute of macro
economy study under the National Development and Reform Commission
(NDRC), the country's industry watchdog, warned a new round of investment
heat having appeared in China, and macro control should be tightened to
cool down the economy.
The report suggested a stringent monetary policy for the central
government to restrain the heated investment and lending, and believed
the current control measures are not enough to curb the overheated
lending.
A mild increase in the interest rate for both deposits and lending is
suggested by the report, with the rate to go up by 0.25 percent for each
round of readjustment.
This will not only help restrain oversupply in both money and products
like steel, cement and others, but also leave more space for further
economic readjustment in the future, said the report.
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