Website review: CPI leaps to 8.7% in February, 11-...
ElForko discovered this in Economics
•1 reviews since Apr 5, 2008
economics
•chinadaily.com.cn/china/2008-03/11/content_65...
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LafnLion rated 5 months ago- Inflation in China is causing the Chinese Central Bank to raise their interest rates, which is the textbook central bank response to inflation. In the US, in response to the banking crisis, the Fed lowered interest rates in spite of inflation. The problem for the Chinese is that raising interest rates makes their currency more valuable, while the US is in effect devaluing theirs. Since the Chinese economy's growth has been driven by exports to the US, this will make their factories less competitive. Yet holding or lowering interest rates will cause inflation to become worse. What is to be done?
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