PBOC: Still room for interest rate hikes

People’s Bank of China Governor Zhou Xiaochuan said at the National People’s Congress Sunday that there is still room for using all monetary policy tools, including further interest rate increases, to cool China’s economy, Bloomberg reported. The central bank raised lending and deposit rates six times in 2007, resulting in the current 7.47% deposit rate, a nine-year high. Inflation, one of the targets of the cooling measures, remains high, rising to 8.7% in February. Zhou mentioned that recent "special factors" such as harsh winter weather and last month’s Spring Festival holiday have affected economic indicators, and that it was "too early" to judge whether measures already taken have succeeded in slowing down credit and money-supply growth. Earlier at the meeting, Zhou had said that there was "no need" to use the appreciation of the yuan to fight inflation.