China Raises Interest Rates Again to Cool Inflation

[alp227]

Source: The New York Times

BEIJING — China’s central bank announced on Saturday that it was raising interest rates for the second time in about two months in what appears to be a long-term campaign to suppress inflation as many ordinary Chinese express discontent with rising consumer prices.

The People’s Bank of China said it would raise the one-year benchmark lending rate by 25 basis points to 5.81 percent, and the benchmark deposit rate by the same amount to 2.75 percent.

The Chinese economy has been awash in liquidity due to government stimulus money and generous lending by state banks. Chinese officials are now concerned about an overheated economy and the inflationary pressures that come with that.

Read more: http://www.nytimes.com/2010/12/26/business/global/26chinarates.html

[TrogL]

1. Does that include the rate on US debt?

[alp227]

2. probably

some more passages

The fact that China’s economy has remained robust during the global recession gives Chinese officials leeway to rein in liquidity. The country has been growing at an average of 10 percent a year, and the strength of the export industry remains high despite a dip in late 2008, when the financial crisis first roiled the United States and then other parts of the world.

Until now, low wages have helped to hold down inflation and keep China’s export industry competitive. But those wages in the context of soaring real estate prices mean that migrant workers from the interior of China are becoming less tolerant of poor work conditions on the coasts, where many of China’s export manufacturing factories are located.

[Name removed]

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[Massacure]

5. No.

The U.S. borrows money by selling promissory notes at auction. When the government changes interest rates, it changes rates at which is lends money to financial institutions, not the rate at which it is borrowing money from whoever is willing to buy the notes.

[greiner3]

4. Japan was in a similar condition in the 90s;

And they let their economy go south. Will China learn from other's mistakes; probably? Would the US do the same; let profit reign and the little man be damned is the resounding call.

[Prometheus Bound]

6. I thought Japan had the opposite problem: deflation and low low interest rates.