China barks at inflation, but clearly their bark is harsher than their bite. Faced with growing inflation, China raised the one-year lending rate and the one-year deposit rate by a quarter point to 6.06% and 3% respectively. Although this looks tough and is making the U.S. Stock market nervous, the deposit rate still remains 2 percentage points less than the pace of consumer inflation. Clearly they will have to raise rates further to truly combat inflation.
Here at home, stocks are fluttering a bit at China’s rate rise, bur are continuing their steady climb. It seems nothing can stand in the way of Bernanke and the Federal Reserve’s gravy train of free flowing money through quantative easing. We are overdue for a correction, but the market can stay overdue for a long time. The trend remains strong.
Regards -Keith Springer