BEIJING: Surging housing prices and a severe drought in southwest China may prompt the central bank to raise interest rates as early as this month, a senior government economist said on Friday.
"I think if property prices continue to rise widely, the central bank may have to raise interest rates as early as this month," said Zhu Baoliang, chief economist at the State Information Centre, a top government think-tank on April 9.
"Inflation expectations could grow due to surging property prices while the worsening drought may also have an impact on prices," he added.
Zhu, who had previously expected the central bank to stay pat until July, said he moved forward his outlook because the property sector had showed no signs of cooling.
Consumer price inflation in March could be lower than the 2.7 percent rate in February, but price rises may gain steam in the coming months and hit as high as 4 percent, Zhu predicted.
Zhu repeated his view that China would let the yuan resume its gradual rise at some point this year to help fight inflation, with a widening of the daily trading band.But a one-off yuan revaluation looked unlikely, he said.- Reuters