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Harry Monk

China Raises Interest Rates

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LONDON (ShareCast) - 1310: Footsie (news) has taken a rather sharp turn into the red following news that China has raised interest rates to keep a lid on inflation. Miners, which depend on the Far Eastern economic powerhouse for metals demand, are among the heaviest fallers

http://uk.finance.yahoo.com/news/market-overview-china-rate-rise-scoops-market-digilook-1fcc90fb006e.html

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The People's Bank of China said it would raise the one-year yuan lending rate to 5.56pc from 5.31pc, and the one-year yuan deposit rate to 2.5pc from 2.25pc from Wednesday.

The move reflects official concern at China's property market bubble and persistent inflation, with the consumer price index expected to rise by 3.6pc year-on-year in September.

http://www.telegraph.co.uk/finance/china-business/8073073/China-interest-rate-rise-surprises-markets.html

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Interesting. If one of the primary reasons for this rate rise however is to quell the runaway HPI in the Chinese housing market would such a modest rise prove effectual? There's a ton of money in China just looking for a home hence the crazy levels of HPI.

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It puts into perspective how sick the UK economy is in that they were recently suggesting no UK Bank Rate rises until maybe 2012 combined with even more printing of money (during the "recovery" :lol::lol::lol: )

It's quite symbolic of the different directions the two economies are taking and a reflection on the UK's political and financial leadership these days.

It's quite shocking that a country like the UK which actually led the industrial revolution hasn't managed to maintain some technical niches for its relatively small population to exploit to the rapidly expanding developing nations rather than having to rely on bank frauds, pension and savings thievery, borrowing, taxation and house trading and such like etc to try to survive.

Edited by billybong

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Is this likely to put pressure on the Fed or BoE to raise rates?

Quite possibly. A cunning move to force the US, UK and Eurozone into a sudden massive economic and sovereign debt crisis ?

"Who us? No, we're merely stopping our domestic property market from overheating."

Have to say my initial reaction was upon seeing the day's gold price gains wiped out, was one of mild concern. However, having followed the logic, this is excellent news. Nice one China for speeding up the race to the end game :ph34r:

Edited by General Congreve

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“We have long forecast a rate hike before the year-end and our current forecast envisions an additional 50 basis points (0.5pc points) of rate hikes in 2011,” said Nick Chamie at RBC.

Could well be more with China's economy overheating more than they thought. The last time they started to increase rates from this sort of level they went up about 2% in about 18 months.

Edited by billybong

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Quite possibly. A cunning move to force the US, UK and Eurozone into a sudden massive economic and sovereign debt crisis ?

"Who us? No, we're merely stopping our domestic property market from overheating."

Have to say my initial reaction was upon seeing the day's gold price gains wiped out, was one of mild concern. However, having followed the logic, this is excellent news. Nice one China for speeding up the race to the end game :ph34r:

The opposite.

Curbing 'demand' in a world with little demand and China exported deflation will drive commods down and the dollar up.

At least until they take their foot of the brake once more, or revalue upwards or do something to stimulate domestic demand.

Edit: Ah look, dollar gold down $40 at time of writing. Dollar surge imminent.

Edited by Frank Sidebottom

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From the Ticker Forum:

The yuan is pegged to the dollar, so in practice the dollar is pegged to the yuan. Higher interest rates in China props up the yuan and the dollar at the same time.

and:

Without convertible Rmb and a pegged dollar rate
is this equivalent to a u.s rate rise?
I'll have to think about that one a bit.

Interesting times, indeed. :blink:

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From the Ticker Forum:

The yuan is pegged to the dollar, so in practice the dollar is pegged to the yuan. Higher interest rates in China props up the yuan and the dollar at the same time.

and:

Without convertible Rmb and a pegged dollar rate
is this equivalent to a u.s rate rise?
I'll have to think about that one a bit.

Interesting times, indeed. :blink:

Don't agree with Denninger at all.

Yuan is 'pegged' by China. As far as the US Fed is concerned there is no peg. China maintains this peg by following the US interest rates and by buying US debt.

This will likely result in the RMB revaluing upwards against the USD which is what the US Fed wants.

I don't know where Denninger gets his perverse logic.

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Quite possibly. A cunning move to force the US, UK and Eurozone into a sudden massive economic and sovereign debt crisis ?

"Who us? No, we're merely stopping our domestic property market from overheating."

Have to say my initial reaction was upon seeing the day's gold price gains wiped out, was one of mild concern. However, having followed the logic, this is excellent news. Nice one China for speeding up the race to the end game :ph34r:

The end game could wipe out China, they have huge social problems under their nice communist system.

If China is gambling it can trigger a contained American default it's running a very high risk strategy, I'm sure they will be running economic models on this scenario trouble it there are too many variables.

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"China raises interest rates" was today's most important economic news by a country mile... no mention of it on today's BBC news but then that is to our advantage.

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It puts into perspective how sick the UK economy is in that they were recently suggesting no UK Bank Rate rises until maybe 2012 combined with even more printing of money (during the "recovery" :lol::lol::lol: )

It's quite symbolic of the different directions the two economies are taking and a reflection on the UK's political and financial leadership these days.

It's quite shocking that a country like the UK which actually led the industrial revolution hasn't managed to maintain some technical niches for its relatively small population to exploit to the rapidly expanding developing nations rather than having to rely on bank frauds, pension and savings thievery, borrowing, taxation and house trading and such like etc to try to survive.

The economies that haven't built up a crippling debt load are the ones that are raising rates. Our economy OTOH is based on everyone borrowing through the nose hence rates are being kept low until there is no choice but to raise them (by which time it's too late).

Sadly, our politicians seem to think that our currency is 'hard' by right and don't seem to understand that as you print your debts away, everyone else catches on and you lose that status and hence the ability to print your way out of trouble. Unlike the dollar which is the defacto world reserve currency, petro currency and commodities currency, the pound has little to back it. Bad news when we import so much of our needs, including food and energy.

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Don't agree with Denninger at all.

Yuan is 'pegged' by China. As far as the US Fed is concerned there is no peg. China maintains this peg by following the US interest rates and by buying US debt.

This will likely result in the RMB revaluing upwards against the USD which is what the US Fed wants.

I don't know where Denninger gets his perverse logic.

It doesn't matter who enforces the peg - the result will be the same. A peg is a peg, and as long as the peg is maintained and IRs rise in China the dollar will rise and smash the weaker economy into shatters. This is result of being laden with debt, and is exactly what the US has been doing to third world countries for years.

Meanwhile...., all currencies pegged to the dollar that are also deep in debt (poodle pound) are going to be soon starring into the abyss.

This is economic warfare.

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  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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