Interest rate rise gains support from China’s central bank

January 8, 2018

BEIJING - Top researchers at China’s central bank, the People’s Bank of China, have agreed that higher interest rates will help squeeze asset bubbles and restrain debt expansion, providing a tool for broader oversight of financial activities, the China Daily reports.

 "There is room for an increase in interest rates in the short term as industrial product prices and enterprises' profitability have improved since last year," Ji Min, deputy head of the central bank's research bureau, told China Daily over the weekend.

Inflation and foreign exchange rates also need to be factored in before adjusting interest rates, he said.

The head of the research bureau, Xu Zhong, expressed a similar opinion in November, China Daily said.

A possible hike in interest rates, along with the key lever of cutting the overcapacity of industrial producers, would further improve producers' investment returns by curbing debt expansion regardless of the costs of borrowing, according to the officials. (ATI).