Economy

China may stop raising interest rates soon

(Xinhua)
Updated: 2011-06-05 09:50

BEIJING - China's recent interest rate hikes may soon come to an end, but another rate increase is still possible before the end of this month, according to Lian Ping, chief economist for the Bank of Communications.

Stagflation, or a combination of high inflation and a sharp economic slowdown, is unlikely to occur in China, Lian said. Inflation is likely to fall in the second half of this year, reducing the likelihood of more interest rate hikes, according to Lian.

Lian said that the public may be overly concerned about rising inflation and the further tightening of China's monetary policies.

The Bank of Communications lowered its forecast for China's economic growth in 2011 to 9.5 percent, down from its previous forecast of 10 percent.

Lian expects the Consumer Price Index (CPI), a main gauge of inflation, to rise by 5.5 percent year-on-year in May and climb even higher in June and July.

He said weak consumption and an economic slowdown will drag down the CPI figure over the coming months, while the adjustment of commodity prices on the global market will also help to curb inflation.

"The CPI may rise in the future, but it will not be out of control," he said.