Interest rates are rising (in China)

Bloomberg reports on China's latest move to quell rising inflation - the central bank just raised interest rates for the sixth time this year to a nine-year high of 7.47 percent for the benchmark one-year lending rate.

Consumer prices rose 6.9 percent in November, property prices climbed at the fastest pace in two years and the main stock index has more than doubled in 2007. Higher borrowing costs and 10 increases in banks' reserve requirements have failed to stem the gains, underscoring concern the economy may overheat.

"Inflation expectations are rising and the central bank really needs aggressive action to cool them," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. "They will get even more aggressive from now on."
The central bank said it wants to curb inflation and overheating and implement the "tightened" monetary policy announced this month. China had already raised the proportion of deposits that lenders must set aside as reserves by the most in four years, effective Dec. 25, and ordered banks to cool lending this quarter.

Today's rate increase "won't be enough" as inflation cuts real returns on deposits, said Huang Yiping, chief Asia economist of Citigroup Inc. in Hong Kong.

Consumer prices jumped in November on fuel and food costs. Households' concern about inflation is at the highest level since a survey began in 1999, the central bank said today.

They might have better luck with inflation if they would stop printing up so damned much of the local currency to exchange for U.S. Dollars.

Of course, that would cause their currency to strengthen considerably and they know what happened to Japan almost 20 years ago.