Author: Feng Lu, Peking University

Latest data released by the Chinese State Statistical Bureau in 2010 indicates the consumer price index in China increased by 2.8 per cent and the producer price index by 6.8 per cent year-on-year to April this year. The growing inflationary pressure again highlights the need for China to raise interest rates.

In the wake of the global financial crisis countries including Australia and India, raised interest rates in order to control potential inflationary problems. On 28 April Brazil also raised interest rates by 75 base points to 9.5 per cent. In light of China’s economic fundamentals, China should follow suit rapidly. Read more…