China will not raise interest rates this week, People's Bank of China governor Zhou Xiaochuan has said, amid speculation that further monetary tightening measures would be taken to curb inflation and prevent the economy from overheating.
The head of the central bank said he was satisfied with the current interest rate level and the country does not need to adjust interest rates too frequently, according to a report in China Securities Journal published on Tuesday.
When asked about the possibility of an imminent interest rate increase, he said that would not happen during the week of November 19.
However, the top banker would not rule out the possibility of another interest rate hike in the long term, said the report.
"The interest rate level depends on the economic data," he said. "Therefore we will watch future statistics closely."
Zhou's comments came in the midst of growing speculation that the central bank would resort to the sixth interest rate increase this year to curb inflation and prevent the world's fourth largest economy from overheating.
In October, the Consumer Price Index (CPI) rebounded to an 11-year high of 6.5 percent. That doubles the official target of three percent for 2007. The CPI growth for the whole of this year might be around 4.5 percent, the central bank has estimated in a report.
In the first three quarters of 2007, the country registered an 11.5 percent growth in Gross Domestic Product (GDP) on rapid expansion in credit and investment.
The rise in the cost of living in China has sparked fears across the Pacific, as that might eventually result in accelerating inflation in the United States.
Surging food costs in China could drive wages higher, before pushing China into a broad inflationary spiral, the US-based Investors Business Daily quoted some economists as saying.
That would lead to higher prices for Chinese exports and then lead to inflation in the US, which was the second largest destination for Chinese exports after the European Union.
America's October import costs from China rose 2.2 percent, the biggest yearly gain since surveys began in 2004, according to the report. Import prices from China have climbed a record five months in a row.
(China Daily November 21, 2007)
