Consumer price inflation in China eased slightly to open the second quarter of the year, although price growth remained above the government’s target level and lending exceeded expectations, according to Bloomberg. On Wednesday, the Chinese statistics agency reported that consumer prices increased by 5.3% year-over-year in April, which was slightly slower than the previous month but still well above Premier Wen Jiabao’s 4% target. The reading was higher than the 5.2% forecast by economists, and is still hovering around a three-year high.
Brian Jackson of Royal Bank of Canada said, “Inflation is too high and will keep the policy bias in favor of more action over the next few months,” adding, “We expect another two rates hikes and further yuan appreciation against the dollar.” Additionally, the People’s Bank of China reported that banks offered 740 billion yuan worth of local-currency loans on the month. The median forecast is for the benchmark one-year lending rate to increase by a quarter point to 6.56% before the end of the year.