China Rate Hike Unlikely as PPI Seen Slowing from Q2: Times

China may see less need to raise interest rates as the PPI is likely to slow in Q2 and Q3 after surging 9% y/y in May, which was the highest in almost 13 years, while CPI may only rise moderately, the Securities Times reported citing analysts. Rising raw material prices, driven by higher prices of crude oil, iron ore and non-ferrous metals, have contributed six percentage points to the PPI surge. However, higher prices of upstream products have failed to transmit to the consumer markets due to weak demand, which may discourage investment in expanding production, the Times said citing Wu Chaoming, chief economist of Chasing Securities. Policymakers should stabilize inflation expectation by ensuring commodity supplies, the newspaper said.