China may raise interest rates as early as the end of this week after Beijing pledged to tighten its monetary policy next year to fight inflation, state media reported yesterday.
There is a “sensitive policy window” for a rate hike this weekend, before the release on Monday of key economic indicators for last month, including the consumer inflation reading, the official China Securities Journal said.
The nation’s consumer price index (CPI) rose 4.4 percent year-on-year in October, well above the government’s full-year target of 3 percent, with the prices of 18 types of vegetable increasing more than 60 percent.
“With reference to the central bank’s practice of raising interest rates right before the release of CPI, there is a sensitive policy window around this weekend,” the newspaper said, without citing any source.
A rate hike would support China’s recent pledge to tighten up its monetary policy next year, the report added.
The Chinese Communist Party’s Politburo decided to shift its stance from “relatively loose” to “prudent” on Friday, Xinhua news agency reported.
The central bank hiked interest rates in October for the first time in nearly three years. State media cited analysts as saying that by raising benchmark interest rates at that time, the central bank signalled to the market that rates may continue to be adjusted.
Meanwhile, in Sydney, Australia left interest rates on hold at 4.75 percent yesterday, saying conditions were uncertain in Europe and the strong local dollar would help keep a lid on inflation.
“The exchange rate has risen significantly this year, reflecting the high level of commodity prices and the respective outlooks for monetary policy in Australia and the major countries,” central bank governor Glenn Stevens said. “This will assist, at the margin, in containing pressure on inflation over the period ahead.”
The pause had been widely tipped by analysts after domestic growth slowed last quarter to financial crisis levels of 0.2 percent and eurozone finance worries were stoked by woes in Ireland and Hungary.