The issue of interest rate increase, which had attracted much concern from all parties, finally became clear on the night of December 20. People's Bank of China announced that RMB deposit benchmark lending rate will be adjusted from December 21 onwards. The interest rate for one-year deposits again increased 0.27 percent to 4.14 percent and the benchmark-lending rate raised 0.18 percent to 7.47 percent.
However, this time the trend was different, as unfixed deposit interest rate was adjusted downward for the first time. Accumulation Fund lending rate remained unchanged, lending rate for more than five years did not modified.
Just in last week, the National Bureau of Statistics announced the record data of CPI at 6.9 percent in November; it accelerated the expectation of interest rate increase.
Raising interest rates for the sixth time, this year, the People's Bank spokesman said that the increase was aimed at playing the role of the price lever, so as to guide the public in the midst of inflation in domestic prices and provide a background to international environment.
He also pointed out that the interest rate adjustment is beneficial to the implementation of tight monetary policy. He stressed it will help prevent overheated economic growth and restrict skyrocketing inflation.
Fibre2fashion, News Desk - China
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