Rate Hike Is No Major Surprise

October 2004 | Market Strategy

The People's Bank of China (PBOC) has ended months of speculation by raising its benchmark one-year lending rate by 27bps from 5.31% to 5.58%, and the one-year deposit rate by the same amount, to 2.25%. The former was the first increase since July 1995, and the decision was taken in order to further cool the economy from overheating. BMI has long warned of the possibility of a rate hike this autumn. Indeed, we pointed out on our on-line service (see 25 October 2004) that the rate at which China's economy was slowing down was too slow. We came to this

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