Uncertainty about inflationary pressures remains

Information Times December 21 News of Deutsche Bank Greater China chief economist Ma recently said that the possibility of higher interest rate increases in the two quarter next year, and as China's foreign exchange reserves have risen sharply, the government may raise deposit reserve rate in the next few months. Ma said the market had different views on inflation expectations as the CPI was first regularized in November. In some ways, the evolution of inflationary pressures will lead to differences in macro policies.　　Ma that there is still greater uncertainty about inflationary pressures next year, with the most conservative estimate of inflation at 1.5% per cent, which could be 5% if food, real estate and oil prices continue to rise, boosting inflation. In addition, MA thought, as the deposit demand trend strengthened, may accelerate the money circulation speed, in the case that the total currency is unchanged, will also pull inflation. "The velocity of money is rising by a lapse, which may occur in the next 2~3 quarter, but there is greater uncertainty about the number." "Will the government adopt a rate hike to curb inflation?" Ma thought that, in all policy instruments, the most uncertain rate hike, in response to the current market to raise interest rates may lead to accelerated inflows of hot money, Ma said, the increase may not necessarily accelerate hot money inflows, but will curb hot money, because more hot money is speculation in the stock market, after the interest rate hike, hot money will therefore flow out,　　It is expected to raise interest rates in the two quarter next year, and as China's foreign exchange reserves soar, the government may raise deposit reserve rates over the next few months. The dollar has rebounded steadily since December and the market expects the dollar to regain its rally. In this respect, MA that the United States next August will usher in a rate hike cycle, so the U.S. dollar will continue to weaken in the short term, but as the interest rate near the other currencies will be devalued, the first half of next year the dollar will strengthen, and the trend will last for several years.