Magazine article Global Finance

Central Bank Puts the Brakes on as Economy Speeds Ahead

Magazine article Global Finance

Central Bank Puts the Brakes on as Economy Speeds Ahead

Article excerpt

CHINA

The People's Bank of China introduced new tightening measures to cool the property market last month, as the economy showed no sign of slowing and investment growth continued well above the government's target. The central bank increased the five-year benchmark mortgage rate from 5.31% to 6.12%. It also raised the required down-payment ratio from 20% to 30% in areas with rising prices.

The average price for residential housing rose 15.2% last year, much higher than the rise of other price indexes. A spokesperson for the central bank said that the rise in housing prices could lead to financial risks, and that the rate rise would help guide the housing sector down the proper track.

These were marginal steps, according to analysts, who expect the PBOC to raise other rates soon to slow the economy. Last October, interest rates were increased by 27 basis points.

China's fixed investment rose at an annual rate of 24. …

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