Negative interest rates continue to deteriorate 16 times in 16 months, CPI will rise again in June

On the 22nd, the National Development and Reform Commission predicted that the overall price increase in June will be higher than that in May. Since then, China has been in a negative interest rate for 16 consecutive months, and the central bank has raised interest rates slowly. After the negative interest rate began to appear in February 2010, the central bank began raising interest rates in October 2010. The interest rate has been raised four times so far. Interest rates have been raised by 1%, while the CPI year-on-year increase has risen from 2.7% in February last year to 5.5% in May this year. Today's negative interest rate is five times higher than the negative interest rate at the beginning. Professionals have questioned this rate hike strategy. Our reporter's statistics show that since China's CPI increased by 2.7% year-on-year in February 2010 (the annual interest rate was only 2.25%), the negative interest rate level has continued for 16 months. In May this year, CPI increased by 5.5% year-on-year, but the current one-year interest rate is 3.25%, and the negative interest rate level is -2.25%. In the same period, the central bank raised interest rates far less than the inflation rate. For example, the negative interest rate in February 2010 was only -0.45% (2.25%-2.7%). In just 16 months, the negative interest rate level has continued to expand by a full five times (2.25%/0.45%=5). Yesterday, the person in charge of the price department of the National Development and Reform Commission said that it is expected that the overall price increase in June will be higher than that in May. In the second half of the year, due to the rapid decline of the hike, the new price increase factor will continue to be contained, and the CPI will rise at a high level. The annual price will operate in a controlled range. Development and Reform Commission: pork prices will rise. Statistics from the National Bureau of Statistics show that the increase in pork prices in May is particularly evident in the CPI. At present, the average price of pork in the country is 12.33 yuan per catty, up 75% year-on-year, and has already exceeded the 2008 high. From the later point of view, he predicted that due to the current increase in pork prices is significantly lower than the increase in hog prices, pork prices may increase to some extent in the later period. However, it is unlikely that it will continue to rise in the later period. The person in charge also said that from the survey situation, the recent drought and natural disasters have limited impact on China's agricultural production, and the possibility of a sharp rise in food prices is very small. CPI is highly recommended: three years of new loans amounted to 25 trillion. A considerable number of experts believe that the price increase of pork and aquatic products has become the last push for CPI. It is expected that CPI will reach its peak in June, with a year-on-year increase of 6 %about. But professionals point out that in fact, currency oversolding since 2008 is the real cause of rising prices. So far, the broad money in the Chinese economy has exceeded 73 trillion yuan, which is nearly twice the total GDP of China. In the past three years, the new loans of the Chinese banking industry have reached 25 trillion yuan. According to the laws of history, Lu Zhengwei, chief economist of Industrial Bank, said: "In the 1980s, when two conditions were met at the same time, a crisis could occur: 1. The US exchange rate continued to appreciate; 2. The Fed continued to raise interest rates. Although currently It is difficult to determine the specific time for these two conditions to occur, but in the next five years or so, I am afraid it will be a very serious period. Do not raise interest rates because of the need to take into account local governments and state-owned enterprises? Negative interest rates continue to deteriorate, why is the central bank difficult ? Determined to continue to raise interest rates? Fusen University economics professor Wei Sen said that if the central bank raises interest rates, first of all, some local governments and state-owned departments with huge open and implicit liabilities can not stand. Second, by the end of April this year, the central bank's total debt scale is high. 27 trillion yuan, and the cost of its liabilities, in principle, is equal to the benchmark interest rate of domestic deposits. If the central bank raises interest rates, its own losses will increase, and even the assets will not be insolvent. There is also a rumor in the market that it is afraid that hot money will flow in without Raising interest rates, Professor Xu Xiaonian of the China Europe Business School pointed out that this is untenable: First, there is no zero-cost policy in the world. Second, the appreciation of the renminbi may be more attractive to hot money. Why can it appreciate without raising interest rates? Third, interest rates in emerging countries (such as 8% in India and 12% in Brazil) are much higher than in China. Hot money is not necessarily biased. China. Finally, he pointed out that as an inaccurate indicator of hot money, the net outflow of “missing and error” last year was $59.7 billion, not an inflow. The main way for the central bank to fight this round of inflation is to raise the deposit reserve ratio. Xu Xiaonian said: The theoretical upper limit of the reserve ratio is 100%, and adding to 25% should be no problem. What is puzzling is the immobile rate. Interest rate hikes attract funds back to banks, reducing market purchasing power and effectively curbing CPI. Of course, this will increase the interest burden on state-owned enterprises and the government. ”  

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