Overseas Investment Banks Have Lowered China's Interest Rate Expectations

A week ago, the market was still sighing for China's slightly higher CPI data. After a week, everyone was busy lowering the expectation of China's deflation.

Taking into account uncertainties such as the European debt crisis, many overseas investment banks have re adjusted their expectations of China's rate hike in the past two days.

The general keynote is: the rate of increase in interest rates will be reduced, and the opportunity to start will be delayed.

Morgan Stanley said in an e-mail 19 days that China expects to raise interest rates at most once this year, and that interest rates will rise in the second half of the year.

The bank expected China to raise interest rates in the first half of this year.

Deutsche Bank also "softened" its prediction on China's rate hike.

In a recent report quoted by overseas media, the bank lowered its forecast for China's interest rate hike this year, from two to three times to a single time, and said that the government might be more inclined to use "administrative means rather than interest rate tools to cool the economy".

The Wall Street journal, 18, quoted a research report sent to customers by Credit Suisse, saying that China's policymakers may be more cautious about tightening measures, especially after the sharp decline in the volume of real estate pactions, due to the heightened fears of a two dip in the European economic turmoil.

Tao Dong, a Chinese economist at Credit Suisse, said that Credit Suisse believes that the timing of China's interest rate hike has been postponed until the global economic outlook is clearer.

However, the bank insists that China's inflation rate will rise sharply in the second half of this year.

Analysts believe that the recent government began to pay more attention to the European debt situation, prompting the outside world to tighten up the expected tightening of the policy expected to heat up.

When President Hu Jintao met with German President Keller this week, he said that the foundation of the world economic recovery is still not solid, and countries should continue to adhere to the measures to stimulate the economy.

A spokesman for the Ministry of Commerce expressed concern about the possible impact of the European debt crisis on global recovery and China's exports.

In fact, the situation in Europe has raised global vigilance.

The South Korean government said on the 19 day that the country is closely monitoring the possible negative impact of the spread of the European debt crisis and said the government still needs to maintain its current stimulus policy.

The first vice president of IMF, Mr lip key, said on Tuesday that the Greek debt crisis is still a considerable risk to the global economic outlook, and that the world economy still needs policy support.