China raises interest rates again today--inflation projected to hit 6.2% in June

07/06/2011 12:01 pm EST


Jim Jubak

Founder and Editor,

Well, that kills any suspense about next week’s report on June inflation in China. Today, July 6, the People’s Bank of China, which gets to see the inflation numbers before they’re publicly released, raised its benchmark interest rate for the third time this year to 6.56% from a prior 6.31%. The one-year rate on bank deposits will go up to 3.5% from 3.25%.

Economists are projecting that June inflation will climb to 6.2% in June, according to Bloomberg, from 5.5% in May. Optimistic economists at JPMorgan Chase, HSBC, and Bank of America Merrill Lynch still say that inflation will moderate in the second half of the year and that this increase may be the last this year. The government’s official target inflation rate is still 4%, but in recent speeches Premier Wen Jiabao has started to use 5% as a “realistic” inflation target for this year.

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