Citigroup (NYSE:C), Morgan Stanley (NYSE:MS) and China Interest Rate Hikes

Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) are on the record as saying the People's Bank of China will continue to raise interest rate in 2011 to combat inflation.

Morgan Stanley projects three interest rate hikes of 25bp each in 2011, while Citigroup looks at an overall boost of 100bp on the year.

The People's Bank of China just raised their interest rate again, this time by 25 basis points to 5.81 percent; that's for its benchmark one-year rate.

For the one-year deposit rate, that was increased to 2.75 percent.

In November, China's inflation rate surged to 5.1 percent, reaching its highest level in over two years.

As for China's M2, that has increased 55 percent over the last couple of years.

For all of 2010, inflation should end at 3.3 percent in China, above the 3 percent policymakers were looking for.