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Beijing will attempt to avoid rate hikes, says Moody’s

Date: 10 Feb 2010

The credit rating agency predicts that the People’s Bank of China will sparingly increase interest rates this year, preferring to use bank reserve and treasury bond yield increases to control credit growth and inflation.

Keywords (click to search): [China] [central bank] [rates] [treasury bonds] [inflation] [Moody's] [Alistair Chan]

Pamela Tang

China will only hike interest rates slowly this year, choosing instead to rein in lending and inflation via increase of bank reserve requirements and raising the yields on treasury notes, predicts credit rating agency Moody's.

Beijing restarted using such measures last month and Alaistair Chan, associate economist at Moody's Economy.com, expects that it will continue favouring them.

On January 12, the People’s Bank of China (PBoC) announced it would increase the deposit reserve requirement ratio for banks by 0.5 percentage points to 16%. Earlier that month, it sold three-month bills...

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