Yi Xianrong: China must raise interest rates further
(Reuters)
Updated: 2006-07-03 14:18
China must raise interest rates more aggressively to stifle demand for credit
that has fuelled an investment boom, an influential government economist said in
remarks published on Monday.
 Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a
top government think-tank, joined a chorus in support of raising borrowing costs
to help ward off economic overheating after a slew of tightening measures in
recent weeks.
"Many economic problems are a result of low interest rates and therefore
raising bank lending and deposit rates would be the best method to resolve the
problems," Yi was quoted as saying in a report posted on the official Web site
(Chinamoney.com.cn).
"Raising bank lending and deposit rates is imperative."
In late April, the central bank raised the benchmark one-year lending rate to
5.85 percent from 5.58 percent in response to the faster-than-expected economic
growth of 10.3 percent in the first quarter, but it kept bank deposit rates
unchanged.
The rate rise was the first since October
2004.
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