China raises rates again in inflation fight

China raised interest rates on Thursday for the sixth time this year, a move intended in large part to ease growing public concerns about rising inflation.

The announcement of the rate rise came shortly after the People's Bank of China released a survey of depositors showing their dissatisfaction with price levels and expectations of continued increases- both at recent highs.

The central bank raised one-year benchmark deposit rates by 27 basis points to 4.14 per cent, and one-year lending rates by 18 basis points to 7.47 per cent.

The bank said it ordered the increase in order to "guide public inflation expectations" at a time when there was "upward pressure on domestic price levels and complex trends in the international environment".

Fuelled by soaring prices for pork, Chinese consumer inflation hit 6.9 per cent in November and looks likely to persist longer than officials had hoped.

In a sign that previous efforts to promote pig-rearing are proving insufficient, the government this week promised to double its subsidy to farmers for each fertile sow to Rmb100 next year and to give Rmb2.5bn to support large-scale standardised pig production.

However, economists warn that higher food prices are likely to endure and, together with rising energy costs, will fuel wider inflationary pressures.

Of 20,000 depositors questioned for the central bank survey, some 48 per cent considered prices to be "overly high and hard to accept", a rise of 23 percentage points year-on-year.

"Separately, 64.8 per cent of those surveyed expected prices to continue to rise next year, a record high" for the quarterly survey, which began in 1999, the bank said.

While the survey's vague wording leaves details of respondents' expectations unclear, it highlights the risk that price pressures will spread throughout the economy.

"It's a vicious circle. Once people get the idea that prices are going to be significantly higher then they are going to push for wage hikes," said Stephen Green, senior economist at Standard Chartered.

"If expectations are out of the basket, then it's very hard to control them again," he said.

Rising inflation comes at a time where there are broader concerns about the Chinese economy amid signs of over-investment in some sectors and forecasts of a major downturn in demand from the US.

A separate central bank survey of 5,497 companies found they were under growing pressure from higher prices and were increasingly concerned about over-heating.

"The enterprise confidence index is falling in step with intensifying concerns among company managers about overheating tendencies in the economy," the central bank said.

Despite such worries, the survey found some recovery in companies' fixed-asset investment, while a separate survey of commercial bankers found that a majority of them thought monetary policy "too tight".

Although bank real interest rates are negative, repeated interest rate rises appear to have boosted savers' enthusiasm, with the central bank survey finding growing numbers of depositors describing their returns as "appropriate". Recent stock market falls had also cooled enthusiasm for such investments, the central bank said.

To promote the use of term deposits - and thus prevent rapid shifts of funds from banks to stocks - the central bank cut the interest rate for current accounts by nine basis points to 0.72 per cent. ( FT )

Britain expects 'very significant' week for Brexit talks as clock ticks down
Britain expects 'very significant' week for Brexit talks as clock ticks down
Turkey's export of grain, legumes to France declines
Turkey's export of grain, legumes to France declines
The President of Turkmenistan receives representative of medical community of Germany
The President of Turkmenistan receives representative of medical community of Germany
Loading Bars
Latest
Iran boosts manufacturing of passenger cars
UAE cabinet approves new cybersecurity body, climate change envoy
Geostat reveals volume of ferroalloys exported by Georgia to Turkey
Bahar Azadi gold coin price still falling in Iran
Kazakhstan continues introduction of mobile diagnostic tools in railway sector
Azerbaijan, Uzbekistan discuss possibilities of attracting investors to Azerbaijan territories liberated from occupation
Britain expects 'very significant' week for Brexit talks as clock ticks down
Iran declares cargo transportation from Sistan and Baluchestan Province
Death toll from COVID-19 tops 172,000 in Brazil
Chinese companies to process Uzbek garlic for further export to US and European countries
Turkey's export of grain, legumes to France declines
Iran reveals its COVID-19 data for November 29
Details of Iran’s trade turnover announced
EU aims to support Georgia in its efforts to reform electricity market
Azerbaijan confirms 4,170 new COVID-19 cases, 1,985 recoveries
5.5-magnitude quake hits Vanuatu
Azersu LLC announces tender for purchase of equipment for laboratory
Kazakhstan's import of Turkish cement up
Azerbaijan shows footage of Aghdam's Shahbuldag village (PHOTO/VIDEO)
Expenses on construction of enterprises in Iran’s Isfahan Province increases
Number of enterprises launched in Iran's Ilam Province shrinks
Turkmengas opens tender for maintenance of gas turbine generators
At least 30 police killed, over 20 wounded in suicide car bomb explosion in E. Afghanistan
Georgia reports 4 426 new coronavirus cases, 3 721 recoveries, 35 deaths
Over 5,500 patients recover from coronavirus in Moscow in the past day
Azerbaijan shows footage of liberated from occupation villages of Kalbajar region (PHOTO/VIDEO)
China increases import of Turkish cars
Employment in Iran's Alborz Province declines
The President of Turkmenistan receives representative of medical community of Germany
S. Korea reports 450 more COVID-19 cases, 33,824 in total
Azerbaijan's turnover on payment cards in 10M2020 up
Inter-Agency Coordination Council discusses enforcement of Covid restrictions
Azerbaijan has ample opportunities and potential for artificial intelligence dev't
Trump may announce plans for 2024 presidential race during Biden’s inauguration
826 more coronavirus cases recorded in Kazakhstan over 24 hours
France sees further fall in COVID-19 hospitalizations as lockdown exit starts
Turkey's Temsa makes 1st electric bus exports to Sweden
Iran registers monthly positive trade balance
Scottish dev’t agency eyes establishing co-op with companies in Uzbekistan’s Karakalpakstan
Croatian PM in self-quarantine after wife contracts COVID-19
UK records another 15,871 coronavirus cases with 479 deaths
Some 46,000 people gather in Paris to protest against security bill
Kazakhstan to modify large energy saving projects on railways
Severe fire danger for Australia as temperatures smash records
Dozens of Boko Haram militants killed in Nigeria airstrikes
Pope installs new cardinals, including first African-American
WHO reports new daily record high of over 747,000 COVID-19 cases
UK police arrest 155 in anti-lockdown protests in London
Assistant to Azerbaijani president posts footage from Tartar, Aghdam cities
UK, France sign new deal to stop illegal migration across Channel
Iran discloses electricity generation at Iran's Bandar Abbas TPP
Turkey reports 6,714 new COVID-19 cases, 487,912 in total
Zarif: Iran at forefront of fighting terrorism
Georgia takes necessary steps to avoid increase in bread prices
Ethiopian military has taken 'full control' of Tigray capital, government says
Iran’s Bahar Azadi gold coin price continues to fall
Weekly review of Azerbaijani precious metals market
Kazakhstan raises import of grain, legumes from Turkey
Buy/sell operations at Iran Mercantile Exchange revealed
AP publishes article covering Armenian missile attack on Azerbaijan’s Ganja on Oct.17 (PHOTO/VIDEO)
OIC adopts resolutions in connection with Armenia's aggression against Azerbaijan
President, members of Board of European Muslim Forum send letter to President Aliyev
Aghdam district of Azerbaijan after 27 years of Armenian occupation (VIDEO)
Kazakhstan to bring waste processing level to average European level
UK appoints minister in charge of COVID-19 vaccine rollout
Number of blocked malware in AzStateNet network drops
Airport in Uzbekistan to buy auto parts via tender
Iranian Energy Exchange announces products to be on sale November 29
Azerbaijani team takes third place in group exercises at 36th European Rhythmic Gymnastics Championships
At least 6 killed in Somali capital suicide bombing
Microsoft Azerbaijan to support all initiatives in liberated territories of Azerbaijan
Azerbaijan shows footage of Kalbajar's Vang village (VIDEO)
Police fire tear gas at Paris protest against police violence
Electricity imports growing in Georgia
Cargo, passenger traffic via Turkish Sabiha Gokcen Airport slumps amid pandemic
Uzbek-Korean JSC Uz-Dong Won Co. announces tender for steel pipes supply
Cargo transportation at Turkish Antalya airport reduces
Austria records nearly 1,000 COVID-19 deaths over past 10 days
State Employment Agency of Azerbaijan opens tender on supporting start-up projects
Results of Azerbaijan's junior national team performance at 36th European Rhythmic Gymnastics Championships announced
Details of Iran’s exports to Iraq declared
Azerbaijan reports 4,212 new COVID-19 cases, 1,760 recoveries
Four citizens dead as result of mine exploding in Fuzuli - Azerbaijani Prosecutor General's Office
Kazakhstan's export volumes to China surge despite COVID-19
Assistant to Azerbaijan's president, diplomats, Garabagh FC representatives visit Aghdam Mosque (PHOTO)
Turkmenistan committed to promoting socio-economic development of Afghanistan
Georgian oil companies seek to avoid price increases
Tender for maintenance of elevators, escalators launched in Turkey
Azerbaijan's ten-month output of oil products declines
Turkey's export of grain and legumes to Turkmenistan up
Turkmenistan, Belarus discuss program of cooperation
Iran reveals its COVID-19 data for November 28
Azerbaijani president's assistant, diplomatic corps reps arrive at liberated Aghdam city
Rural digitalization project successfully underway in Kazakhstan
Missile fired to Tartar by Armenia delivered to local museum - president's assistant (VIDEO)
Number of enterprises put into operation in Iran's Ardabil Province up
Water problems center to be created in Uzbekistan’s Khorezm region
Khazar Consortium opens tender for purchase of lubricating oil
Azerbaijan’s Baku Telephone Communications opens tender
Georgia sees increase in COVID-19 cases
All news