Posts Tagged ‘China Central Bank’

Notes From Underground: Chinese inflation is the overblown news story

December 12, 2010

The markets were waiting to see the Chinese inflation numbers and a possible interest rate increase from the CENTRAL BANK. The Chinese price increases were higher than expected and some analysts believed that the rise in food prices was the culprit for the inflation increase. Hu Jintao, China’s president, assured the Politburo that inflation would be dealt with and they would “battle inflation without jeopardizing growth.” Friday, before the release of the inflation data, China raised its reserve requirement by another 50 basis points. Reserve requirements have not yet had much success in slowing Chinese growth in the past. If food prices are REALLY the major variable causing prices to rise, wouldn’t an appreciating YUAN with increased food imports do a great deal to stem food price inflation?

(more…)