BIZCHINA / News
Inflation hits 27-month high with CPI up 3.4%
By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-06-12 10:42
A vendor arranges watermelons at a market in Nanjing, East China's
Jiangsu Province, June 12, 2007. Surging food prices boosted China's
annual consumer price inflation to a 27-month high of 3.4 percent in May
from 3.0 percent in April, the National Bureau of Statistics said on
Tuesday. [Reuters]
On the timing of the next rates hike, some analysts expect it to happen
before late June as CPI has been hovering at or above three percent for
several months.
However, Shenyin Wanguo Securities chief analyst Gui Haoming put the
timeframe in July or August. The central bank raised the interest rates
just in mid-may and it usually will wait some time to see the feedback
before another move, making rates hike in June unlikely, Gui explained.
Qiu Yanying of TX Investment Consulting Co. echoed Gui's points. Qiu
expected the central bank to wait until next month's CPI is released
before deciding on further interest rates hike.
Stock market
The analysts are divided on the impact of an interest rate rise on the
stock market, which is gradually recovering after a series of slumps
caused by the stamp tax hike announced on May 29.
The influence on the equity market will be limited, as an interest rates
hike was expected, said Gui Haoming.
However, other analysts thought the market is currently at a sensitive
period and an increase in interest rates will probably result in wilder
fluctuation. They also pointed to the weak performances of banking stocks
in the last few days, which they said was caused by expectation of a
rates hike.
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