JPMorgan Research report: expected to raise interest rates next year or two times

While the Politburo's meeting was clear, it continued to implement aggressive fiscal policy and moderately loose monetary policy. But Ms Ulrich, managing director of foreign investment banking, JPMorgan Chase, released a new study yesterday predicting that the central bank has tightened liquidity for 7 consecutive weeks, and that the central bank's policy interest rate will remain unchanged until the middle of 2010, when it is likely to tighten further monetary tightening through RRR hikes over the next 6-9 months.　　Meanwhile, the central bank will raise benchmark interest rates in the middle of 2010, raising interest rates two times a year, 27 basis points at a time. The central bank tightened liquidity for 7 consecutive weeks as the spreads between China and the US limited the scope of the basic interest rate adjustment, the Government took administrative measures to solve the problem of excessive liquidity. In recent months, the central bank, based on management of inflationary expectations and controls on market liquidity, has begun to operate through open markets to shrink money. According to the report, the People's Bank of China has a net repurchase of RMB 123 billion, 81 billion, 93 billion and 2 billion yuan in the 4 weeks ending November 27. The central bank has tightened liquidity for the 7th consecutive week.　　　　Ms Ulrich points out that the central bank has to increase market openness as the market continues to express concerns that a strong liquidity environment could lead to asset price bubbles in the stock and property markets. The reserve ratio will be raised in the next 9 months given the uncertainty of the recovery in major export markets and the relative moderation in inflation prospects, Ms Ulrich predicts that China will maintain policy interest rates at the current level by the middle of 2010. "Positive fiscal and moderately easy monetary policy" will continue next year, with more emphasis on structural adjustment, especially domestic consumption.　　In addition, in the next three to 6-9 months, the central bank may raise the deposit reserve ratio to further tighten monetary tightening, while the central bank will raise the benchmark interest rate in the middle of 2010, two interest rate hikes throughout 2010, 27 points each time. Bank financing will not take place in the short term for the current concern of the stock market, Ms Ulrich notes that investors are increasingly worried about the supply of new shares, including the Long Yuan construction, China Pacific Insurance, Huatai Securities and Rusal and other companies have recently been planning to start tightening at the end of China's liquidity in Hong Kong or Shanghai　　In the future, a A-level or two-tier market financing is huge, the huge supply of new shares increased investor concern about market risk. Ms Ulrich points out that China's big banks now seem to have yet to face immediate funding pressures and that, in view of the potential market impact and the need for co-ordination between regulators, there will not be a rise in capital adequacy requirements in the short term. It is expected that the recent demand for China's large listed banks of about RMB 300 billion to meet the increased capital adequacy requirements (assuming a capital adequacy ratio of 13%) has not calculated the internal capital generation capacity of banks and potential level two capital financing.