Chinese government may increase interest rates

Chinese government may increase interest rates

Chinese government may reportedly have to increase interest rates on the condition that inflation exceeds 5%. Moreover, it is stated that, inflation rates may be increased to help cut investments in overheating industries, such as steel, aluminum and real estate. Current lending interest rate applied by Central Bank is 5.3%. As reported by SteelOrbis, inflation in China reached 3.8% in April, which is higher than the target of 3% determined by the government. Certain analysts claim that rise in interest may not result in decrease in money flow. Moreover, it is stated that interest rates shouldn't be increased before US does the same as it will widen the gap between Yuan and US Dollar. It is stated that government will follow price fluctuations before increasing rates.