Six interest rate hikes, 10 increases in banks’ required reserve ratios (i.e. the proportion of assets they must lodge with the central bank and not lend out) – and the economy still grows by 11.4% in 2007, its fastest pace in 13 years.
Meanwhile, inflation came to 6.5% in December, just down from the record 6.9% consumer price index growth seen the previous month. This puts 2007 full-year inflation at 4.8%, well above the government’s 3% target.
Roll on a more frugal 2008… or so Beijing will be hoping. The policymakers made similar noises last year but the general consensus appears to be that the controls (direct credit tightening as well as the standard interest rate and reserve ratio measures) will be more severely imposed this time around.
For reference, Citi predicts 11%, Deutsche Bank 10.4% and UBS 10.4%.