Interest Rate Rise Gains Support

- Jan 08, 2018 -

The central bank's top researchers have agreed recently that higher interest rates will help to squeeze asset bubbles and restrain debt expansion, as a tool to be used with broader oversight of financial activities.

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"There is room for an increase in interest rates in the short term as industrial product prices and enterprises' profitability have improved since last year," Ji Min, deputy head of the central bank's research bureau, told China Daily over the weekend.

Inflation and foreign exchange rates also have to be factored in before adjusting interest rates, he said.

The head of the research bureau, Xu Zhong, expressed a similar opinion in November.

From a global perspective, the deleveraging process always goes hand in hand with interest rates hikes, as shown by the normalization of monetary policy after abnormal monetary easing programs employed after the global financial crisis, officials said. The US Federal Reserve is predicted to raise interest rates three times this year and the European Central Bank may also stop purchasing assets in the coming months.——Yeslinkele.com

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