Sheng Songcheng, vice head of the Shanghai branch of the People's Bank of China, said that putting a check on spending by implementing an interest rate hike could put added pressure on the currency. But doing nothing had its risks too. "No rate rise should distort the business behavior of enterprises and impel hoarding of raw materials," Sheng was quoted as saying in the Securities Journal. The central bank has said it might raise the lending rate on one-year renmimbi loans, now at 5.31%, if inflation exceeds 5%.
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