Money

Central bank adviser sees more rate hikes this year: Report

(Agencies)
Updated: 2011-04-01 14:09

SHANGHAI - China will likely raise interest rates further this year in a bid to squelch stubborn inflation and bring real deposit rates back into positive territory, the China Securities Journal reported on Friday, citing an adviser to the Chinese central bank.

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Xia Bin, an academic adviser on the People's Bank of China's monetary policy committee, also said China may finally achieve positive real deposit rates, which are inflation adjusted.

Chinese inflation topped expectations at 4.9 percent in the year to February, near its fastest level in more than two years, and looks set to accelerate further in coming months as the economy races ahead and prices of food and commodities such as oil remain high.

So far, the central bank has relied mainly on quantitative tightening measures, notably hiking banks' reserve requirements, to mop up excessive liquidity in the economy.

It has raised interest rates three times and bank reserve requirements six times since October, most recently on March 18. The government has also used a series of direct controls to cap price rises.