Money

Another rate hike likely in China this year: HSBC

(China.org.cn)
Updated: 2010-10-27 08:56

The People's Bank of China (PBOC), China's central bank, is likely to increase the benchmark interest rate by another 25 basis points before the year's end, said chief economist at HSBC, Qu Hongbin in his latest report.

According to Qu, the PBOC conducted the recent rate hike in order to curb home prices and answer people's concerns about a negative real interest rate. He believes that the central bank can easily achieve this goal with another 25-basis-points rate hike. As a result, there won't be any rate hikes next year.

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China's consumer price index rose by 3.6 percent year-on-year in September, marking a record high in 23 months. However, inflation has peaked, said Qu. He expects China's producer price index to fall below?three percent by the end of the year.

The HSBC also expects China's economic growth for the rest of 2010 to slow to about?nine percent from 9.6 percent of the third quarter, Qu said in the report.