NewsMine — economy — united-states — 2004 — 2004-oct-nov — Viewing Item

Interest rate rise by china confuses west { October 29 2004 } Original Source Link: (May no longer be active)    http://business.timesonline.co.uk/article/0,,16849-1334420,00.html http://business.timesonline.co.uk/article/0,,16849-1334420,00.html October 29, 2004 Interest rate rise by China has West confused By Graham Searjeant, Financial Editor CHINA has raised its interest rates for the first time in nine years to curb inflation and stop its fast-growing economy overheating. The move brought confused reactions in Western markets as traders debated whether it would cool commodity prices or hasten a yuan revaluation. The People’s Bank of China is putting its one-year lending rate up by only 0.27 percentage points to 5.58 per cent but the move marks a sharper change of policy and is seen by market economists as a prelude to further rate rises next year. Business borrowers are likely to face steeper increases in charges from today. Until now, banks could charge no more than a 70 per cent premium over the official rate, but this limit has been abolished. The economy has been booming since a cut in interest rates in 2002. Several indirect measures have been taken to curb construction and capital projects, including guidance to banks on lending and a cull of approved projects. In the first nine months of this year, however, output has grown by 9.5 per cent. Investment grew by 28 per cent in spite of a modest slowdown in the third quarter. Consumer price inflation also moved above 5 per cent, which the central bank identified in the spring as a danger signal. Although inflation has officially dipped from 5.3 to 5.2 per cent, it has been flattered by controls on key prices, which the Government wants to lift. The central bank is understood to have been reluctant to raise interest rates because low rates acted as a subsidy to struggling, heavily indebted state enterprises. Indirect curbs have, however, begun to produce distortions, including blackmarket lending and “roundtripping” by traders who could borrow at less than the rate of inflation. John Yip, economist at Morley Fund Management, said: “Credit control is a very blunt instrument. Interest rates are a much more refined instrument.” Qu Hongbin of HSBC Investment Bank said: “We expect interest rates to be raised by another quarter point in the first quarter of 2005 to keep the real lending rate positive. The authorities are also likely to loosen controls over prices for power, energy and transportation this year to curb investment growth.” Money market traders marked down the unofficial premium on the yuan, arguing that the interest move might delay movement on the exchange rate rather than being a prelude to revaluation.

Bush says jobless can go back to school { October 14 2004 } China rate boost may help US Consumer confidence fell seven month low Crude oil falls on speculation inventory gain Dollar and markets dive on greenspan warning { November 20 2004 } Dollar fall pushes gold above 450 { November 26 2004 } Dollar falls to nine year lows { November 4 2004 } Dollar nears record lows bond sink { November 19 2004 } Dollar struggles after stumble Dow and gold up while oil down { November 4 2004 } Economic armageddon predicted { November 23 2004 } Election day gains lost on kerry victory concerns Fears over recovery as walmart sales stall { November 28 2004 } Fed raises rate to 2 percent in november Food stamps in colorado at five year high { August 25 2004 } Gm to close baltimore plant 2005 { November 16 2004 } Gold and stocks go down together Gold heads to 16 year high Gold highest in six months as dollar slides Greenspan playing the fool { October 29 2004 } Greenspan says foreigners may curb financing deficit Imf predicts strong growth Income gap widens and uncertainty spreads { September 20 2004 } Income gap widens more families struggles { September 20 2004 } Interest rate rise by china confuses west { October 29 2004 } Job growth slows raising new concerns { October 9 2004 } Jobs created are minumum wage jobs fastfood no benefits { October 9 2004 } Ranks of areas invisible poor are increasing { October 3 2004 } Retailers usher in holiday season Stocks biggest drop four weeks after oil hike Stocks dip below 10000 mid october { October 13 2004 } Stocks dollar rise as oil drops day before election Stocks fall gold up on high oil prices { October 9 2004 } Stocks fall on producer prices report Stocks fly after bush win Stocks rally 6 days before election { May 12 2003 } Stocks rally big 7 days before election Stocks sent sliding on rash of bad news { October 23 2004 } Trade deficit second biggest ever Trade gap narrows on falling dollar Treasuries slip flustered by inflation scare US isnt concerned about dollar record falls US job growth weaker than expected US jobless rose 20 thousand to 350 thousand Files Listed: 44

Correction/submissions

CIA FOIA Archive

National Security Archives

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information, go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purpose of your own that go beyond 'fair use', you must obtain permission from the copyright owner.