People’s Bank of China raises interest rates to tame inflation

| April 5, 2011 | 0 Comments
People’s Bank of China raises interest rates to tame inflation

The People’s Bank of China today lifted interest rates in a further attempt to fight stubborn inflation.

The central bank increased the one-year yuan lending rate by 25 basis points to 6.31% and the one-year yuan deposit rate, also by 25 basis points, to 3.25%.

The latest figures from China’s National Bureau of Statistics (NBS) show the consumer price index rose to 4.9% in February on an annual basis – the same figure as January.

However, inflation is still well in excess of the 3% target set by the Government and was higher than analysts forecasts of 4.7%.

Food prices alone rocketed by 11% in February on an annual basis. Food costs are the primary cause of high inflation.

Inflation fears are always a concern to Chinese officials due to the potential for price rises to trigger civil unrest.

Last month, Chinese Premier Wen Jiabao said reining in prices was the Government’s “top priority”.

Inflationary pressures are rife in Asia and central banks in Indonesia, Vietnam, Thailand and India have all increased interest rates recently.

Tags: , consumer price index, , , , People’s Bank of China

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