Efforts by the People’s Bank of China appear to be starting to cool the country’s red-hot economy some, say foreign-exchange strategists with BNP Paribas. The latest tightening measure was a 25-basis-point rate hike on Christmas, and China’s Purchasing Managers Index, released on New Year’s Day, fell to 53.9 from 55.2 in November. “Though the index remains in expansionary territory, the fall is the first since July and suggests that the PBOC’s quantitative tightening measures are beginning to bite,” BNP Paribas says. “Our economists expect this slowdown to continue through the first quarter.” BNP notes that Zhang Chenghui, vice head of the State Council's Development Research Center Finance Research Institute, has suggested the PBOC should hike interest rates another four or five times in 2011 to limit inflation. Metals traders tend to keep close tabs on the Chinese economy, which is a large consumer of many commodities and is the world’s largest user of copper.
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Efforts by the People’s Bank of China appear to be starting to cool the country’s red-hot economy some, say foreign-exchange strategists with BNP Paribas. The latest tightening measure was a 25-basis-point rate hike on Christmas, and China’s Purchasing Managers Index, released on New Year’s Day, fell to 53.9 from 55.2 in November. “Though the index remains in expansionary territory, the fall is the first since July and suggests that the PBOC’s quantitative tightening measures are beginning to bite,” BNP Paribas says. “Our economists expect this slowdown to continue through the first quarter.” BNP notes that Zhang Chenghui, vice head of the State Council's Development Research Center Finance Research Institute, has suggested the PBOC should hike interest rates another four or five times in 2011 to limit inflation. Metals traders tend to keep close tabs on the Chinese economy, which is a large consumer of many commodities and is the world’s largest user of copper.
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