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China Hikes Interest Rate By 25 bps, Third 2011 Rate Hike
The PBoC just announced its 3rd interest rate hike for 2011. In a statement just released, the Chinese central bank hiked its one year benchmark deposit and lending rates by 0.25%. To those following the 1 and 2 Week SHIBOR and repo rates this is hardly a surprise, as the recent liquidity thawing experienced an abrupt reverse in the past two days. In the meantime, expect to see more realization that the Chinese soft landing may be in for some bumpy times.
More from Reuters:
China's central bank increased interest rates for the third time this year on Wednesday, making clear that taming inflation is a top priority even when as the economy slows gently.
Benchmark one-year lending rates will be raised 25 basis points to 6.56 percent, and benchmark one-year deposit rates will be raised 25 basis points to 3.5 percent, the central bank said in a short statement on its website.
Following are analysts comments on the move:
QIAO YONGYUAN, AN ANALYST AT CEBM IN SHANGHAI, SAID:
"The interest rate rise is largely in line with market expectation, as most institutions expected one interest rate rise in July.
"The move is aiming to curb the quickening inflation, which may climb to as high as 6.2 percent in the year to June.
"I think this will not flag an end of the tightening measures and the central bank could raise interest rate once more for the reminder of the year.
"The government is paying attention to high prices of pork. In addition, other the costs of non-food items also keep rising, which could add more pressure to inflation in the coming months."
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SHIBOR to go subzero in 3.. 2...
What about the IIBOR (Idiot Interbank Offered Rate) ?
Greenspan tried this right at the end of his career... and then quickly realized the shit was about to hit the fan. So he brought rates back down, humiliated himself with his now famous "I found a flaw" speech, retired in a hurry, and handed the ball to Bernanke.
Watch for history to repeat itself...
Yea, shit hit the fan in the US because everyone lives beyond their means. Over here? we're loving these hikes.
Yep, I love seeing them too. So does everyone who has savings in China. Which, consequently is probably 5x the number of savers in the states, per capita.
Hell yea... I just wired over everything sitting in the US and HK so I could max out the 100w limits for short term CDs. 6% on 30 days works out to something like a free $840 a month before taking into consideration the gains on exchange. 100% safe investing and that $840 easily covers all my monthly expenses, meaning my savings rate is now over 100% per month. Not bad at all.
This advert was brought to you by the PBoC.
Congrats. Put it your water fund and lay in a supply of hazmat suits that actually work. Buy an immigrant to be a coal mine canary. Camel investment might pay off too.
We have water delivered like everyone else, it's cheaper than the filter supplies. We get nongfu though, so it's 19RMB per thing of it. It's not really polluted all that bad at all here anymore. Apartment is paid in full (cash), car was bought with cash, no debts or financial obligations of any kind. Pretty nice.
I was thinking more along the lines of a Five Year Plan.
Hmmm...
You do know the difference between a Certificate of Deposit and a Checking Account?
Myself, I would never ever put my beloved fiat Euros in CDs
Yep, 31 days locked up at a time. Suits my purposes rather well seeing as there's no risk.
Nongfu is good water. I drink it, my wife drinks it, and my daughter drinks it. Last time I was in Beijing I tested a bunch of stuff for VOCs and Rads. I was surprised to find absolute background ~40CPM in the tap water. And VOCs in Beijing are down as well.
Nevermind these people upset that their empire is crumbling. The smart ones among us have already hedged that risk so we shall speak freely.
Haters gonna hate.
The smart ones got out years ago.... we may be rats, but at least we won't be going down with the ship like the suckers.
We are talking nominal...what's the real interest rate.
Anyone notice the PIIS 2 year and 10 years today? Particularly Portugal and Ireland.
Look Spanish 10yrs Bond Sir.
Ireland ;portugal and GReece are in default (officially)
Ireland gonna be downgraded and Ftse UK 100 Stock gonna plunge like hardstones to the deepest ocean.
NExt Team ( Spain,Belgium and Italy)
Belgium depends on the fact if their new austeriy package of 28 billion euro is approved before the end of august by the parlement.
( I don't think so :) )
1. If you sell you stocks within the first year you bought them, you pay a extra tax in the profits. (he targets anybody with money, typically a socialist)
2. Unemployment benefits should be cut and also limited in time (the guy is a socialist... his voters will kill him)
3. Every state should manage their own money ( viva las united europe thinking...)
4. 1/3 of the sum should come from new taxes (I pay 53% taxes on my salery and 21% on everything I buy... I can't imagine I would need to pay more...)
Conclusion: Or he'll get shot. Or there will be still no government after august. We'll be in a mess after the summer.
You are full of chocolate.
First comes Spain. Probably only Spain, first.
Belgium could just squeeze more taxes out of Sudden Debt, let's say 75% on his salary and 25% VAT.
Italy? Italy's "Achilles's heel" is the French Banking System. As long as the Maginot Line holds, Italy could just wait.
You don't want to waste those crises, otherwise you overload the attention span of the financial system and then all can go back to "extend % pretend", which worked fine for some 45 years...
I love the smell of risk off in the morning.
Tyler,
This is a very important new
Markit plans separate Euro high-yield index for Greece and Portugal
Two Euros?
They, one for all all for one.
Europe is running a race against the clock. In order to save the euro, they actually need it to become a reserve currency. In order to do so, they need to add as many countries so they can print as manny euro's as need to surpass the dollar in quantity (about 25% extra euro's is needed).
The problem is, they need to do it at current value and they can only do this by adding more countries or back it up by gold but that's not really a option.
They'll keep them both. They'll will quicken the expansion of Europe, that's my guess: WELCOME TURKEY!! WELCOME EVERYBODY!
NEXT: EUROPEAN EXPANSION TO NORTH AFRICA!
Good Idea, Turkey should be welcome. Booming.
Only they are busy at the moment poking fun out of the Greeks and explaining them that having their own currency and banking system brought them the current boom.
Whats the craic with moody’s, Portugal had to go to the market TODAY, is it not a bit odd that Moodys downgraded them just last night? Im finding that very fucking strange. There is overwhelming support(80%) for the austerity, they have brought forward some privatisations and have even got the public to donate Christmas bonuses for christ sake! Why are the markets still listening to the fuckwits that helped to manufacture all this? The same agency that still has the UK and the US as AAA, this fucking stinks, there is no way there is any objectivity in all this, who are they in bed with this time?
I suspect it was the German's fault. They must have shown their new bailout proposal, which includes losses for private creditors, so S&P were forced to respond.
The Germans seem to make very good engineers, but very poor poker players..
Who owns Moody's.
dont have a clue who owns it, i suppose it wouldnt be hard to find out - Buffet owns 20% from what i can gather...
12% at last count.
Should still be the largest shareholder tho.
Wouldnt at all be surprised if this is the fuck with europe using the ratings agencies play.
Even the Germans are catching on, Schaeuble is seriously pissed with them.
No surprise that the Chinese started Dagong, too bad Moody's still has more credibility tho lol.
This is the fuck with the ROW's debt ratings and funding to sell USTs play.
Don't piss of Schaeuble, he is bloody serious (and the real brain behind their government).
And the last of his generation who would even think of getting Silesia back from Poland...
I wish Britain would join the interest rate party again.
So much for inflation being under control...
Wow. The monkeys on the ASX still managed to put it in the green. Oh, right they already had this priced in. This mining boom is different and once in a generation.
May I dare to quote from the 1980 Bilderberg paper ?
So you know what's in store for you in the future by learning from the past:
Canadian Working Paper
Economic Relations between North America And Europe
...
page 92:
2. The monetary system and the future of the dollar
In these same past three years, there have been periods when there was sharp European criticism of American passivity toward the decline in value of the dollar. And in the fall of 1979 it was unquestionably the refusal of the Deutsche Bundesbank to continue supporting the dollar that clinched the case within the American government for the Volcker package. This specific sensitivity remains potentially acute.
And behind it, of course, lie the wider questions of the continued role of the dollar as the dominant reserve currency, and of the operation of an overall system envisaged since 1971 as one of managed floating exchange rates. Many Europeans feel that the U.S. has done too little managing. And if all the major OECD nations have avoided the competitive deprecitiation of their currencies as in the 1930's, they have been concerned to maintain an exchange rate helpful to exports, even if that conflicted with broader objectives of a sound monetary system. There is a built-in conflict here that can too easily become a renewed source of serious friction.
...
Wow !
Exactly the currency wars that we have been witnessing recently already being anticipated in 1980.
The current situation is not so much different from what it was back then..
Remember the early 1980s, the years of high inflation, with Paul Volcker at the helm of the Fed, who then had to raise interest rates to 14 %.
They called it double-digit inflation back then, the meme even made its way into music and films, for example Grandmaster Flash was singing about it in his "The message".
Back in the early 80's the Soviet Union just had invaded Afghanistan, and in Iran the U.S. installed Shah of Persia had been toppled and replaced by Ayatollah Khomeini who flew in by plane from his exile in Paris.
Pin meet bubble.
This will DESTROY gold. Don't even bother bringing up a chart to see how it's doing. Even if it did go up, it still counts as being down somehow.
Interesting though - M2 has fallen through the floor since Q1 2010, Shibor has remained elevated throughout 2011 - indicating that the measures are working in removing money from the system / making money more expensive... yet, after 3 IR hikes and 6 RRR hikes (in 2011), not to mention action taken in the back of half of last year... inflation STILL keeps rising.
Surely, after you have repeated tried certain monetary policy tools... and they aren't having the desired outcome... you surely have to go back the drawing board!