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?
Posts Tagged ‘food prices’
Notes From Underground: Chinese inflation is the overblown news story
December 12, 2010Notes From Underground: G-20 was in Korea looking for its Soul
October 24, 2010The statements coming from G-20 central bank chiefs and finance ministers in South Korea tried to calm the markets nervousness about currency wars. Brazilian Finance Minister Guido Mantega didn’t attend as a form of mild protest to what he felt was previous inconsistencies between words and actions. The U.S. had put forth a proposal that was leaked to the media ahead of formal proceeding for some numerical target on current account surpluses and deficits. In the final communique no formal targets were established.