Is China on the move? It has been approximately two years since the People's Bank of China moved its interest rates. The bank usually has surprises when it comes to making a move within the market. Effective on Wednesday, October 20, 2010, the People’s Bank of China is increasing its one-year lending and deposit rates by one-quarter of a percentage point each. However, this was most unexpected especially to the Chinese.
Most analysts and researchers suggest that this will cause a domino effect on the Chinese economy. Consumer price inflation has already crossed above Beijing’s goal of 3 percent, which was its target for 2010. In August, the annual interest rate was three and a half percent. Because of the interest rate change, The People's Bank of China is raising interest rates on everyone from local governments to companies to mortgage holders all of which are taking on extra debt.
ALJ Analysis
After doing intense research on China and the United States economy, I am concerned about America’s economic future growth. Not to take away from China’s success, but the United States in my discretion seems to be unbalanced, while China is becoming more economically stable. For instance, even though the People’s Bank of China raised interest rates, it supposedly affected certain groups such as local governments, companies, and mortgage holders; it consequently has had an adverse affect on the world’s economy. China could increase the interest on what the United States owes its country; the debt is presently $894.8 billion.
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