From Bloomberg:
China may be running out of options to cool its economy short of allowing a stronger currency after the central bank’s fourth effort in less than four months to rein in growth.
The People’s Bank of China‘s decision Aug. 18 to raise interest rates, following its April move and two increases in banks’ reserve requirement ratio, won’t suffice to cut a surge in spending that threatens to leave the nation with idle factories, falling profits and rising bad loans, economists said.
The latest rate increase “will have next to no impact on the Chinese economy,” said Julian Jessop, chief international economist at Capital Economics in London. “A stronger currency still has an obvious role to play in keeping inflation low and rebalancing the economy towards consumption.” [Full Text]
