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International Investing / China Connection


Subject:  Rate hikes, inflation, and the recent plunge. Date:  10/20/2010  1:40 AM
Author:  Thaeger Number:  3388 of 3437

In case anyone's wondering about the sudden plunge in all things China:

"The People's Bank of China raised its benchmark interest rates by a quarter-percentage point early Tuesday, the first hike since December 2007.

Unlike rate change statements from the U.S. Federal Reserve, the Chinese central bank's statement did not give any reason for the move, nor any commentary on its economic forecast. "

"...But inflation figures due to be released tomorrow should give pause to those who assume China’s economy is on sound footing. To an extent few fully appreciate, China’s astonishing growth rates these past two years have been fueled by an even more astonishing expansion of its money supply, by more than 50 percent. Until now, the inflationary consequences have been largely camouflaged in the form of rising asset prices."
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