Central bank raises benchmark interest rates by 0.27%
(Xinhua)Updated: 2007-03-18 08:59
"To withdraw excess liquidity, the central bank had employed a full range of monetary policy tools, including issuing notes, raising deposit reserve ratio and increasing the benchmark interest rates", said Qin.
Tang believed an increase of 0.27 percentage points in the interest rates was merely a "slight adjustment" and did not herald the end of the central bank's control policy.
The central bank usually raises deposit reserve ratio when there is excess liquidity in the banking system and inflation pressures remain moderate, said Tang.
But various measures - including an interest rate rise - will be adopted once inflation pressures increase, he added.
Yin said, "The central bank usually raises the benchmark interest rates by 0.27 percentage points because sharp adjustments will make too strong an impact on the market."
"An interest rate rise may cause overseas idle funds to enter the country", said Qin. "Economic restructuring is the fundamental way of curbing excess liquidity and preventing a rebound in investment".
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