Bangkok--21 Aug--Standard & Poor's
Standard & Poor's Ratings Services said today that the latest increase in interest rates in the People's Republic of China (A/Stable/A-1) reflects the government's continuing effort to rein in rapid credit and investment growth. The 27 basis point hike in the lending rate, to 6.12%, together with monetary and administrative measures already implemented, will help the rate of economic expansion in the country to ease to a more sustainable level in the near future. This reinforces Standard & Poor's expectations that the government is likely to be successful in maintaining macroeconomic stability in the country.
With this rate hike and the pause in U.S. monetary policy tightening, however, there is now less room for further upward moves in Chinese interest rates. Nevertheless, if economic activity remains excessively buoyant, more policy interventions will be necessary. These could come in the form of direct measures such as changes in reserve requirements, or the introduction of more administrative measures. Going forward, the government is also likely to continue its economic liberalization effort, including greater flexibility in the Chinese renminbi exchange rate.
Media Contact:
David Wargin, New York (1) 212-438-1579
[email protected]
Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
Ping Chew, Singapore (65) 6239-6345