Акция Китая - Public forum of MSU united student networks

央行开始出手给股市降温了

CHINA'S central bank pulled out all the big guns in its financial arsenal yesterday in an unprecedented series of actions aimed at taming the economy.

Interest rates on lending and savings will rise today. Starting Monday, the daily trading band for the currency will be expanded to allow the freer flow of market forces, and in June banks will be required to place a greater percentage of their reserves with the central bank to cut excessive lending.

The surprising moves, reported yesterday on the People's Bank of China Website, are the first time the central bank has taken such a strong series of measures to rein in the booming economy.

The moves precede a major meeting on economic strategy between top Chinese and American officials in Washington next week.

The one-year benchmark lending interest rate was raised 0.18 percentage point to 6.57 percent. The one-year deposit rate made a 0.27 percentage point gain to 3.06 percent. The increases are the fourth since April 2006.

"Rising concern about asset prices (the stock market), not wider goods prices, is the main reason for the hike," said Stephen Green, a Standard Chartered Bank senior economist.

Green said raising deposit rates more than loan rates is necessary to start removing some of the disincentive to save.

Central bank Governor Zhou Xiaochuan expressed concern on May 6 that a bubble may be building in China's equities, while analysts at Goldman Sachs and Credit Suisse Group have said since the start of last week that the stock markets may face a correction.

"Beijing is clearly brewing a series of measures to force a halt to stock price rises," Green said in a note. "Hiking rates is part of that - others include cracking down on inside trading and public warnings from senior leaders on risks involved in the stock markets."

Green said his bank expects the market to fall next week, adding, "If it proves resistant, Beijing will continue with a thousand small cuts until it does."

The daily band in which the yuan is allowed to fluctuate will be widened from 0.3 percent to 0.5 percent.

"The wider daily trading band can help boost the flexibility of yuan," the central bank said.

That would give the bank the option of letting the yuan rise more each day.

The band expansion was clearly timed to show progress ahead of the Strategic Economic Dialogue meetings starting on Tuesday in Washington, Green said.

American officials hope a stronger yuan will help narrow the multibillion-dollar US trade deficit with China by making Chinese goods more expensive.

In the other move, commercial banks will have to increase their reserve ratios from 11 percent to 11.5 percent starting June 5 - the fifth such increase this year and the eighth since June 2006.