China's central bank governor said yesterday there remained room for hiking interest rates despite the growing spread compared with US rates, amid deep concerns in Beijing over inflation.
"There is definitely room for more interest rate hikes," said Zhou Xiaochuan (周小川), governor of the People's Bank of China, speaking at a briefing on the sidelines of the annual session of parliament.
"But we have to consider the pros and cons," he said, addressing the issue of when to hike the rate and by how much.
Worried about inflation, China has raised interest rate hikes six times since early last year, at the same time as the US Federal Reserve lowered them, causing the spread to widen.
Chinese policy makers fear that a too wide spread will attract more speculative funds into the economy, fueling liquidity that is already considered too high.
"Of course the lowering of US interest rates has an impact on Chinese monetary policy. But it's not the only impact. It's one of several," Zhou said.
He said other factors to consider include the necessity to boost consumer spending.
This is part of a broad policy in place since early this decade aimed at making growth depend more on domestic consumption and less on net exports, Zhou said.
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