Researchers at China’s central bank believe that the time may be right to raise interest rates due to recent improvements in industrial prices and profitability, according to Chinese state media.
State-run newspaper China Daily said on Monday that there is now agreement among the People’s Bank of China’s top researchers at that higher rates would “help to squeeze asset bubbles and restrain debt expansion, as a tool to be used with broader oversight of financial activities.” A quote from Ji Min, deputy head of the bank’s research bureau, said that there “is room for an increase in interest rates in the short term as industrial product prices and enterprises’ profitability have improved since last year”.
The China Daily article continued that the rate hike, “along with the key lever of cutting the overcapacity of industrial producers, would further improve producers’ investment returns by curbing debt expansion regardless of the costs of borrowing,” the Financial Times reports.
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