CICC predicts tighter policy could focus on first half of next year

The government will rely mainly on quantitative instruments to bring monetary conditions back to pre-crisis levels, other regulatory tools including interest rates and the exchange rate "Caixin net" (reporter Jing) after the central bank announced the second rate hike in the year, China International Finance Limited December 27, the report forecast that China's inflation in 2011 may be low before the high, so　　Austerity measures could be concentrated in the first half of next year.　　China has raised interest rates since December 26, with a benchmark interest rate of one-year deposit and loan up 0.25% per cent, while other benchmark interest rates on deposit and loan are adjusted accordingly. Peng Wensheng at, chief economist of CICC, said December 27 that the rate hike was a timely response to the government's better-than-expected reaction to the November inflation increase.　　This helps to allay market fears that a slow policy response would be detrimental to managing inflationary expectations and could lead to stronger future regulation.　　In addition to the one-year period, the deposit rate increases are higher than the loan rate increase, Peng Wensheng at that this is consistent with the October asymmetric rate hike, suggesting that the central bank's interest rate hike is to raise the real interest rate is negative deposit rate. CICC is expected to raise interest rates again next year, but it is unlikely to raise interest rates for the next two months. The government may use data from January 2011 and February to assess inflationary pressures and decide whether to raise interest rates.　　CICC is expected to lower inflation ahead of next year, with an average annual CPI of 4.3% per cent, so austerity measures could be concentrated in the first half. CICC analysts ' judgment of inflation is basically consistent with prevailing market forecasts, and the divergence is that CICC still believes that the government will rely heavily on quantitative instruments, such as M2 and credit, to bring monetary conditions back to pre-crisis levels, and that other regulatory instruments will include interest rates and exchange rates,　　The renminbi may appreciate faster to curb imported inflation, which is the result of higher commodity prices. "On the whole, we think that China's economy is essentially a surplus economy and that the cost of resisting inflation is relatively modest." We still maintain the 2011 GDP growth of 9.3% of the same judgment.　　"Peng Wensheng at said. CICC expects China's CPI year-on-year growth to fall to 4.5% in December 2010, up 0.5% per cent a year. PPI year-on-year growth fell from 6.1% in November to 5.2% (up 0.1% per cent on the chain). December new renminbi loans may fall to about 400 billion yuan, M2 growth from November to 19.5% continue to fall to 18.9%.