Whether the People's Bank of China (PBC) will raise the interest rate again is still undecided, revealed yesterday by Yi Gang, assistant to the governor of the PBOC, the Shanghai Securities News reported today.

 

It is same in regard to whether allow Chinese mainland investors to invest in the Hong Kong bourse directly and the deposit insurance system is still under research. Yi made the remarks at the third Beijing International Finance Expo, also known as the 2007 annual conference of the China International Finance Forum.

 

The October consumer price index (CPI) is to be unveiled next Tuesday. Between January and September this year, the CPI grew 4.1 percent year-on-year, significantly exceeding the annual target of three percent set by the government.

 

Although September's CPI growth was a reported 6.2 percent, down 0.3 percentage points from the peak of August's 6.5 percent, it is estimated that October's CPI will rebound, raising pressure on the central bank for yet another interest hike at the end of this year.

 

Nonetheless, Zhou Xiaochuan, the governor of the PBOC, suggested this Tuesday that China's worsening inflation situation will look improve in the last quarter and the central bank won't retrench the monetary policy before the economic figures come out.

 

In Yi's speech, he also noted small and medium enterprises, citizens, as well as migrant workers need more help from banking, securities and insurance services, while large firms have more opportunities to access direct financing in the capital market. The retail businesses for small and medium enterprises and individual investors therefore are set to become the focus for the financial industry.

 

In the meantime, Yi emphasized that financial institutes should strengthen education on individual investors in shouldering risks while they are seeking more returns rather than interests from deposit.

 

(Chinadaily.com.cn November 9, 2007)