Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

China Interest Rate Hike, Once Is Never Enough

Interest-Rates / China Economy Oct 20, 2010 - 03:09 AM GMT

By: James_Pressler

Interest-Rates

In a move that caught international markets flatfooted, this morning the People's Bank of China (PBoC) tightened two key interest rates by 25 basis points, its first rate hike since December 2007. Few analysts expected a rate hike any time before Q1 2011, so such a sudden hike - that lacked any accompanying discussion or explanation - triggered a wave of uncertainty as everyone scrambled to explain the move. So, along with the mob, we offer our own interpretation of today's events. 


First, we recognize this rate hike is long overdue, but like many others we did not believe the PBoC wanted to implement it just yet. (We are also surprised that the central bank opted for a very western 25 basis point hike as opposed to its usual 27- or 18-bp moves, but that is a discussion for another time.) Throughout the year the government has tried to keep lending under control through broader controls - raising bank reserve ratios, tightening lending conditions and requirements for real estate purchases, etc. - to marginal effect. The central bank wanted to contain the growing domestic real estate bubble, but not cool down other sectors of the economy through higher lending rates. Today's rate hike suggests the government is giving up this strategy, perhaps because it has a renewed confidence that the economy is on firmer footing and can withstand some monetary tightening. However, there is another consideration that is at least worth investigating.

We find it quite interesting that a bundle of economic data comes out this Thursday, including the first public look at Q3 GDP and September CPI. The consensus placed these figures at 9.5% and 3.6%, respectively, versus 10.3% and 3.5% during the previous periods. Today's sudden action might suggest that officials see growth running higher than expected, or worse, inflation on the boil. Even though senior officials in the PBoC and in the government insist prices remain contained, we suspect that pressures are rising to the consumer level. If this is true - and Thursday's indicators may well confirm this - then today's rate hike will be the first of many over the next few months. We will discuss the indicators upon their release.

James Pressler — Associate International Economist

http://www.northerntrust.com
James Pressler is an Associate International Economist at The Northern Trust Company, Chicago. He currently monitors emerging markets in sub-Saharan Africa, as well as several European and Asian countries.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Wags
20 Oct 10, 21:33
I'd suggest inflation on the boil

The Chinese media today is a flood with reports of reasons why food prices are going up and showing all the government actions to dampen those effects. Main stream media reports the world over are somewhat unreliable but here, well....

My point is that the party mouth pieces are trampling themselves to get enough airtime to push the blame of rising inflation costs onto anything else. Weather, earthquake, those damn blasted aliens, anyone but the party is responsible.

One cant help but feel that something big is brewing to have them all a flap noticeably. The ongoing repeated announcements of the new 5 year plan calling for better wealth distribution rather than all out growth is a poorly hidden message that we are nearly losing control of this sucker.

Having lived here for a good while, I can attest to the fact that paying more for vegetables and food will much more quickly stir feelings of hostility in the public than the grotesque prices of housing. The two combined, I can already hear the marching of feet.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules