China's monetary policy will continue...>

CHINA PRESS: China's monetary policy will continue to be prudent and neutral

although the U.S. Federal Reserve raised its benchmark interest rate, the

Economic Information Daily, a newspaper under the official Xinhua News Agency,

said in a front-page commentary Monday. The Fed hike will theoretically

strengthen the dollar and lead to depreciation of the yuan, and also cause

capital to flow to the United States. But because the market has fully absorbed

the expectations of the hike, it will have limited impact on the domestic

financial market. The People's Bank of China raised rates slightly in open

market operations, but the central bank does not intend to follow the Fed in

raising the benchmark interest rate. The PBOC wants to guide market expectations

and enforce deleveraging. Though China's economy has been resilient, downward

pressures should not be ignored as the property sector increasingly cools down

and investment growth may slow further. Money market rates are still rising, and

yields of 10-year treasury bills exceed 4%. These conditions all show that now

may not be a good time for China to raise its benchmark interest rate, the

newspaper argued. (Economic Information Daily)