China raised interest rates on Tuesday, its second increase in just
over six weeks, intensifying its campaign against stubbornly high
inflation. The timing was a surprise, coming on the final day of
China’s Lunar New Year holiday, but investors have long expected more
monetary tightening as Beijing struggles to rein in price pressures and
ward off a property bubble. Benchmark one-year deposit rates will be lifted by 25 basis points to
3 per cent, while one-year lending rates will also be raised by 25
basis points to 6.06 per cent, the People’s Bank of China said. The
rises take effect from Feb. 9. Although annual inflation slowed to
4.6 per cent in December, it is set to pick up again in January with
food prices on the rise. This is the third rate increase since China began a monetary tightening cycle in earnest in October. “I
didn’t think it (China’s rate hike) would happen today, but it doesn’t
matter whether you think it will happen today or tomorrow. You know that
interest rates are going up,” said Mike Lenhoff, chief strategist at
Brewer Dolphin in London. With inflation running near its fastest
in over two years, Beijing hopes higher rates will encourage savers to
keep more of their money in banks and also weigh on the demand for
mortgage loans. Anti-inflation talk from the central bank in
recent months has primed investors for more policy tightening and, even
with the latest move, many believe further tightening is in the cards. A Reuters poll in December showed economists expect the one-year deposit rate to climb to 3.25 per cent by June. While
tighter policy may put a lid on China’s growth and have taken a toll on
the country’s share market , many analysts believe any economic
slowdown will be moderate. If anything, that China is tightening
policy at a time when U.S. and euro zone interest rates are at record
lows is a mark of confidence within the country that its economy, the
world’s second-largest, is on solid ground.
" CAD- Housing starts data increased for the month of January .."..
" higher seasonally adjusted rate was due to an increase in rural areas of the country ".....
The pace of new-home construction in Canada increased slightly last
month, rising to 170,400 units on a seasonally adjusted annual rate. That's up from 169,000 in December, according to Canada Mortgage and Housing Corp. The federal agency says the higher seasonally adjusted rate was due to an increase in rural areas of the country. The rate of urban starts fell 1.7 per cent to 146,900 units. The estimated number of actual housing starts in January, without seasonal adjustments, was 10,584. That's down from January 2010, when there were 11,172 actual starts according to revised figures from CMHC.
Want to manage currency risk and increase revenue? Learn more about Risk Management
| 
