Nomura sees more rate hikes in China this year
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The People's Bank of China, China's central bank, Tuesday announced it was raising the benchmark interest rate by 25 basis points, effective from February 9,2011. |
China will raise benchmark interest rates by a further 75 basis points, and increase the reserve requirement ratio by 200 basis points, this year, Nomura Securities predicted in a report published Wednesday.
The People's Bank of China announced a rate increase of 25 basis points on Tuesday, bringing the benchmark 1-year borrowing and lending rates to 3 and 6.06 percent, respectively. It was the third rate hike since October 20, 2010, and the first this year.
Nomura said the rate hike was in line with market expectations because January's consumer price index (CPI) is expected to show a rise. The central bank's move may have been a direct response to surging inflation in January. Nomura predicted China's January CPI figure will be 5.6 percent on reflected a surge in prices caused by the Spring Festival holiday and adverse weather conditions.
Nomura said it expects the interest rate hike to take place in three stages. It also predicts China will raise the benchmark borrowing rate by 125 bps and the lending rate by 75 bps in 2012.
China's business press carried the story above on Thursday. China.org.cn has not checked the stories and does not vouch for their accuracy.
