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China raises interest rates again

Nick Mackie Dec 27, 2010
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China raises interest rates again

Nick Mackie Dec 27, 2010
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JEREMY HOBSON: To China now, where the government raised interest rates again over the weekend. It’s the second hike in just over two months as the Chinese government attempts to curb inflation there. So what does the move mean for us?

Here’s the BBC’s Nick Mackie in Chongqing in Southwest China.


NICK MACKIE: It came as a surprice but it wasn’t necessarily a gift. But on Christmas day, the People’s Bank of China increased interest rates. The Chinese government is clearly determined to rid its inflation. For soaring property and and consumer goods prices threatens social stability.

And according to Justin Urquart-Stewart, the director of Seven Investment Management the impact of the hike will be felt globally.

JUSTIN URQUART-STEWART: This is China trying to apply the brakes to slow down the economy and that then has an impact in terms of demand from the rest of the world.

Chinese Premier Wen Jiabao said on Sunday he had “confidence” that the measures will dampen the economy, which has seen inflation jump to the highest level in two years. China last raised interest rates in mid October — then, commodity and mining stocks tumbled and the U.S. Dollar strengthened against the Euro.

For Americans and Europeans, economic recovery, or otherwise, is now heavily influenced by decisions — made in China.

From Chongqing, I’m the BBC’s Nick Mackie for Marketplace.

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