{"id":3124,"date":"2010-12-01T10:28:27","date_gmt":"2010-12-01T10:28:27","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=3124"},"modified":"2025-03-27T15:49:10","modified_gmt":"2025-03-27T15:49:10","slug":"big-rate-rise-needed-to-quell-chinese-inflation-upsurge","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=3124","title":{"rendered":"Big rate rise needed to quell Chinese inflation upsurge"},"content":{"rendered":"<p>In further evidence that Chinese inflationary pressure is spreading from food to &#8220;core&#8221;, output and input price balances in November&#8217;s purchasing managers surveys (official and private) reached new highs in their 5-6 year histories. Current readings suggest that producer price inflation will accelerate from an annual 5.0% in October to more than 10% in early 2011 &ndash; see chart. Faster PPI rises, in turn, should lift CPI ex. food inflation from 1.6% towards 3% &ndash; see previous <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2010\/11\/11\/chinese-inflation-pick-up-shifting-from-food-to-core.html\">post<\/a> for a chart of this relationship. (Official CPI numbers, of course, understate on-the-ground inflation.)<\/p>\n<p>Chinese policy-makers aim to quell inflation by clamping down on credit and money growth via hikes in reserve requirements and lower lending quotas, avoiding a big rise in interest rates. The strategy is flawed because any slowdown in monetary expansion is likely to be offset by a pick-up in the velocity of circulation as real interest rates fall deeper into negative territory, encouraging more spending and financial speculation. By delaying a significant rate hike, the authorities risk having to slam on the brakes in early 2011, with adverse implications for the economy later next year.\ufeff&nbsp;<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" style=\"width: 680px;\" src=\"\/storage\/chart1_01-12-2010.gif?__SQUARESPACE_CACHEVERSION=1291200780668\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In further evidence that Chinese inflationary pressure is spreading from food to &#8220;core&#8221;, output and input price balances in November&#8217;s purchasing managers surveys (official and private) reached new highs in their 5-6 year histories. Current readings suggest that producer price inflation will accelerate from an annual 5.0% in October to more than 10% in early [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3124","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3124"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3124\/revisions"}],"predecessor-version":[{"id":5433,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3124\/revisions\/5433"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}