Chinese News Report Tips Rate Hike

Mineweb, China Bureau

A statement by China's central bank has raised expectations of an imminent rate increase, two local newspapers reported on Tuesday, with one saying a hike could come as soon as this weekend.

The brief statement on Monday by the People's Bank of China after a quarterly meeting of its monetary policy committee stressed that inflation pressures remain high.

The Economic Information Daily, a newspaper backed by the Xinhua News Agency, said the PBOC statement has raised market expectations for a rate hike this weekend.

The report didn't give any further analysis or evidence on the possible timing of such a move. China's central bank has frequently made such policy moves on holidays and weekends.

Meanwhile the state-run China Securities Journal said the statement sent a message that the authorities aren't optimistic about inflation, and the central bank may raise interest rates again this month.

In its statement on Monday, the PBOC reiterated that it will continue with its "prudent" monetary policy and "maintain basic stability of the yuan exchange rate at a reasonable and balanced level."

China's consumer price index rose 5.5% in May, the fastest increase in nearly three years. Analysts widely expect the headline inflation to hit another high in June because of rising food prices. The data is due to be released on July 15.