China Bumps
China raised interest rates for the 3rd time in 11 months to curb inflation and reduce asset bubbles in the world's fastest growing major economy.
Starting tomorrow, the PBOC (People's Bank Of China) one year benchmark lending rate will be raised 27 basis points from 6.12% to 6.39 %, its highest in 8 years.
The PBOC will probably raise twice more this year. China prints yuan to convert the foreign currency derived from exports of clothes, electronics and steel.
The People's Bank sells bills to soak up some of the cash (read dollars). The process is called sterilization which expanded China's M3 (Money Supply) 16.9 % last year.
For more details and perspective on Chinese inflation and central bank policy see Dr. David Altig's post on Macroblog.
Also check out DD's (Doctor David's) perspective on our "advertised" inflation rate and a serious analysis of the ARM mortgage foreclosure risk.
Starting tomorrow, the PBOC (People's Bank Of China) one year benchmark lending rate will be raised 27 basis points from 6.12% to 6.39 %, its highest in 8 years.
The PBOC will probably raise twice more this year. China prints yuan to convert the foreign currency derived from exports of clothes, electronics and steel.
The People's Bank sells bills to soak up some of the cash (read dollars). The process is called sterilization which expanded China's M3 (Money Supply) 16.9 % last year.
For more details and perspective on Chinese inflation and central bank policy see Dr. David Altig's post on Macroblog.
Also check out DD's (Doctor David's) perspective on our "advertised" inflation rate and a serious analysis of the ARM mortgage foreclosure risk.
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