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China's Rate Hike Will Cool Economy, But Short-Term Pain Will Be Noticed Oct 10
Standard & Poors, Oct 2010
Abstract
The Chinese central bank's move, on Oct. 19, to raise interest rates for the first time in nearly three years is, in Standard & Poor's view, a symbolic move. In our opinion, the surprise interest rate hike sent a clear signal to the market that the Chinese government is prepared to take tough and direct measures to address various economic issues, including the rising inflation threat the republic is facing. While a further rate hike is likely being considered, we do expect additional rate adjustments will come at a rather measured pace. The People's Bank of China (PBOC) has raised the one-year renminbi lending rate to 5.56% from 5.31% and the one-year deposit rate to 2.50% from 2.25%. The modest...
Companies mentioned in this report are: China (People's Republic of)
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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