Friday, November 19, 2010

Citigroup (NYSE:C), Credit Suisse (NYSE:CS), HSBC (NYSE:HBC), UBS AG (NYSE:UBS) Say China Will Increase Interest Rates

A large number of banks are in consensus on the probability that China will raise interest rates, including Citigroup (NYSE:C), Credit Suisse (NYSE:CS), HSBC (NYSE:HBC) and UBS AG (NYSE:UBS), among a number of others.

China's inflation rate caught a number of people off guard, as their consumer price index rose to 4.4 percent, beating expectations.

All believe China's central bank will raise the benchmark one-year lending rate, to 5.46 percent, and the one-year deposit rate, to 2.5 percent.

This would probably have a temporary effect on the price of raw materials and gold, but shouldn't last long, although some industrial metals could remain under downward pressure if it appears China will cut back on expenditures.

In the case of gold, it shouldn't be much more than a blip, unless China surprises with extraordinary measures, which doesn't appear to be the case at this time.

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