China Inflation May Exceed 5%, Credit Suisse Says
China’s inflation rate may accelerate to more than 5 percent by the end of the year, as government measures to cool lending will have little effect, said Tao Dong, chief Asia-Pacific economist at Credit Suisse AG.
“The reserve-ratio hike will have no real effect on draining liquidity, it’s only a symbolic measure,” Tao said at a conference in Shanghai today. There may be a “rush of interest-rate increases” at the end of the year, he said.
The central bank this month ordered lenders to set aside a larger proportion of deposits as reserves and has guided bill yields higher after 2010 began with a surge in lending. Inflation accelerated to a more-than-forecast 1.9 percent in December and gross domestic product climbed 10.7 percent, the fastest pace since 2007, the statistics bureau said Jan. 21.
