June 6, 2007

Pork may cause China's Central Bank to raise interest rates

A rise of interest rates cannot be ruled out, China's central bank governor Zhou Xiaochuan said two weeks after the people's bank of China rose interest rates t curb rising inflation.

The bank last raised interest rates on May 18.

Zhou said the bank stands ready to use monetary policy to maintain the stability of the yuan. China's consumer price index rose 3.0 percent in April, after a 3.3 percent increase in March. However, high pork prices may push inflation higher yet.

Pork accounts for four percent of the basket used to measure consumer prices and its rise is expected to push consumer price inflation up to as much as four percent in the coming months, analysts have said.

China's authorities originally intended to curb inflation at 3 percent.