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Jump in Oct CPI may cause another interest rate hike

2010-11-01 16:39

China's consumer price index (CPI) may increase by 4 percent or even more than 4 percent year-on-year in October, which may trigger People's Bank of China (PBOC), the central bank, to raise interest rates again, according to several organizations' predications, the Beijing-based daily Economic Information reported on Monday.

CPI, a main gauge of inflation, might increase slower in November and December, but China is facing an increasingly bigger inflation pressure in the long term.

Analysts said if the October CPI increase ends up hitting 4 percent or even higher, it means consumer prices will hit a new high this year and the central bank might raise interest rates again, the report said.

Qu Hongbin, chief China economist with HSBC, told the newspaper that when CPI reaches its summit by the end of the year, the PBOC can still allow a 0.25 percentage point increase in the deposit rate.

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