Consumer Price Index (CPI) is the consumer price index. The price change index, which reflects the prices of products and services in residents' lives, is usually used as an important indicator to observe the level of inflation.
If the consumer price index rises too much, it indicates that the inflation transition will bring economic instability, and the central bank will have the risk of tightening monetary and fiscal policies, which will lead to uncertain economic prospects. Therefore, the excessive growth of the index is usually unwelcome.
For example, in the past 12 months, the consumer price index rose by 2.3%, which means that compared with 12 months ago, the cost of living rose by 2.3% on average. When the cost of living goes up, the value of your money will go down. That is to say, a banknote of 100 yuan received a year ago can only buy goods and services worth 97.70 yuan today. Generally speaking, when the increase of CPI & gt3% is called inflation, it means inflation; When the growth rate of CPI> is 5%, we call it series inflation, that is, serious inflation.
What is the relationship between the two?
JPMorgan Chase is fully aware that there are serious differences among China government departments on whether to raise interest rates. each
Departments and government agencies have their considerations. It is not surprising that there is such a difference in China. Pile head
For investors, the key question is to what extent this difference will affect the final formulation and implementation of China's monetary policy. I
Experts believe that in the end, the central government will follow the advice of the central bank to make a decision.
If this logic continues, the challenge for China is how to realize the role of the central bank in formulating and executing the currency.
Policy independence. This may solve the interest rate and monetary policy problems of government agencies and departments.
Disagreement. China started to raise interest rates at the end of 10, which once again proved that China's top management can make the right decision at the right time.
Decide. Next, it should not be an exception for China to change its fixed exchange rate policy. Actually, China.
The recent changes in interest rates prove that JPMorgan Chase's view is correct.
Because we have noticed that the recent interest rate hike means that government departments in China will rely more on market orientation.
Policy tools for managing the current economic cycle. We believe that the next step of policy normalization will be the current.
The exchange rate system has changed, which is the biggest difference from the last round of austerity policy.
The biggest argument about the current exchange rate system is whether China needs to increase its currency flexibility to solve its current burden.
Economic challenges. Under the fixed exchange rate mechanism, China lost its monetary policy autonomy. Structurally, China
I think the exchange rate mechanism should be made more flexible. We believe that with the passage of time,
With the passage of time, China will reform the fixed exchange rate mechanism in the next three to six months. In fact, in terms of circulation,
It seems that in the current situation, in order to better and more efficiently cope with inflation expectations, China.
The exchange rate mechanism needs to be adjusted, especially in the face of import costs pushing up inflation.
Considering that the administrative austerity policy has been adopted and the interest rate hike cycle has begun, it will become necessary to raise interest rates.
Demand-oriented inflation is the pressure of rising consumer prices in China, but the pressure is not great, and the inflation pressure in China is great.
It may come from external factors, such as high prices of oil, raw materials and commodities. Please note that food prices are beginning to stabilize.
To be sure, the authorities are paying more and more attention to the non-food components in CPI, which reflects a fact.
China's inflation rate may rise due to oil prices and other import costs.
165438+ 10 CPI decreased by 0.4% in the month, and this amazing decline was mainly due to food consumption.
Changes in commodity prices, although the upward pressure on non-food prices in the third quarter announced last month has also eased.
Based on a year ago, the annual growth rate of food prices only increased by 5.9%, the lowest level since February.
The growth of.
The new inflation is worrying.
The recent slowdown in CPI growth is due to the slowdown in food prices, not the inflation of food prices.
But be strong. Monetary growth means the easing of inflationary pressure and the threat of wage-driven inflation.
The threat is probably exaggerated. The increase of import cost is the main threat of inflation in 2005. adjuster
RMB exchange rate is the best solution.
The economic report of China 10 was surprisingly good, which became the main performance of greatly reducing the upward pressure of CPI.
. Compared with a year ago, the broad consumer price index reached 5.3% in July and August, while in September,
It dropped to 5.2%, and further dropped to 4.3% in 10. In fact, month after month, October
The broad consumer price index has dropped by 0. 1%, which is the index since June 2003.
It slipped for the first time. Although, since the beginning of 2003, the price inflation of consumer goods has begun.
But this is mainly due to the sharp rise in food prices. Accordingly, after the grain harvest, the generalized consumer price
This index reflects the stability of food prices. On a monthly basis, in 10, the food composition of CPI decreased by 0. 5%.
Last month saw the smallest increase since March: the annualized growth rate was 10.0%.
During this period, non-food prices continued to be at a medium level, but at the same time they rose steadily: the annual growth rate in 10 was.
1.3%, the fastest speed since August 2006 is 5438+0. The focus of inflationary pressure is no longer
The food factor has become a broader cost-driven inflation. JPMorgan Chase's views are universal.
The commodity inflation rate will further slow down and may reach the level of 3% annual growth rate in 2005. This has also become
It is considered that the total interval of moderate growth of interest rate in the next 12 months should be 100 basis points. this
These forecasts are based on the assumption that the fluctuation range of RMB exchange rate will be in the next six months.
It will be relaxed, which will lead to a moderate appreciation of the renminbi.
Monetary growth slowed down.
From a historical perspective, China's inflation closely followed the growth of the monetary aggregate and became China.
Monetary law. Especially after the number of people in M2 reached the bottom of 200 1, in 2002-2003.
During this period, M2 achieved accelerated growth, that is, CPI-type inflation that has been increasing since the beginning of 2003.
Paved the way. In a broader sense, the growth of M2 peaked earlier this year, which means CPI.
The expansion of commodities will enter 2005. However, this model was temporarily interrupted by this year's credit tightening measures.
Since the second quarter of this year, the credit crunch has led to a rapid decline in M2 and bank loans. Real liquidity bar
A misleading indicator shows that loanable funds of similar size quickly flows out of the formal banking system, and
Enter the underground gray credit market.
The official M2 indicator once again underestimated the actual liquidity, and in an excessive year, the growth of M2 obviously exceeded.
After the nominal GDP growth, the range reached 7-8%. In the next few months, the official interest rate will rise.
It may eventually buffer the growth of money, because they bring some liquidity back to the formal banking system. but
However, in contrast to this chaos, underground credit continues.
Import cost is the main factor of inflation.
Concerns about inflationary pressure next year include changes in labor market conditions. Since 2003,
Since the end of last year, the unprecedented labor shortage has become increasingly serious, especially for export enterprises in the Pearl River Delta region.
In the industry. According to estimates, the labor shortage gap has reached 2 million, mainly in the traditional sense.
Workers from the countryside. The fear is that China will eventually face the limitation of labor supply, even in terms of technology.
The same is true for small batch work. This pressure of labor shortage is likely to lead to a continuous increase in wages in China.
Dynamic inflation.
Our view is that the recent development reflects the friction in the labor market, which is not a comprehensive labor.
The power is insufficient. In particular, due to the rising prices of agricultural products, the growth of relative income has caused the substitution of rural labor.
It is the decrease of urban labor force that increases the opportunity cost of rural labor force to work in coastal manufacturing centers. This is very
It may mean that the wages of these low-income workers need to be adjusted, which will also be related to the increase of rural income.
Improve together. However, there is no real threat from rising inflation. In fact, employees are a whole.
The growth of physical income is along with the nominal GDP, which does not mean that the rise of the overall wage level will promote it.
Inflation is on the rise.
The inflation of import cost is the most important factor considered by policy makers. Looking forward to inflation in 2005
Inflation, the main risk of its upward trend comes from the continuous rise of import costs, especially oil and raw materials.
Commodity imports, especially considering the limitations of domestic resources, are unlikely to ease in the near future. in China
In the recent monetary policy implementation report, the People's Bank of China continued to pay attention to energy-related and industrial raw material costs.
This growth shows obvious concern. In fact, although the upward pressure of the broad consumer price index is obvious
Relax, but the upward pressure of inflation brought by PPI shows no signs of slowing down. get through
According to the calculation of the People's Bank of China, the overall import price continued to rise, and the year-on-year growth rate slowed down in the third quarter.
It reached 15.5%. If it continues, this trend will create money for downstream industrial products.
The risks brought by expansion pressure are getting bigger and bigger.
gain two ends at once
Relax the fluctuation range of RMB, kill two birds with one stone. Now, inflation expectations will become neutral.
The key points of policy making in China. Because the most serious inflation threat in 2005 came from external factors,
In the inflation driven by rising import costs, according to the basic principles of economics, the most feasible way is to rise.
Value RMB. A lot of other important factors have explained that China's economy needs a more flexible exchange rate mechanism.
At this time. For example, in managing China's own business cycle, China needs to participate in the currency.
The central bank has been given more initiative in policy formulation and implementation.
Another potential benefit of a moderate appreciation of the renminbi is to increase the purchasing power of middle-class families. This will have
It helps to support government departments to revise the economic growth model, making China more inclined to promote China through domestic consumption.
China's economic growth will become an important goal of macroeconomic policy in 2005. In this sense,
The inflationary pressure caused by import costs should be eased and policy makers will be more flexible.
The exchange rate mechanism adds weight.
Strategies and strategic factors of appreciation
JPMorgan Chase believes that China is in the strategic stage of deciding whether to revalue the RMB. What's the decision now?
When and how to take the first step of RMB appreciation.
JPMorgan Chase's latest survey shows that China's domestic financial industry has reached a consensus: China will have to let go.
Expand the floating range of RMB exchange rate and allow RMB to appreciate against the US dollar. The keynote of China's public discussion is also there.
What changes is no longer whether the RMB should appreciate, but how and when.
This means that China's views have changed greatly. Considering the technical arrangement, China is accelerating.
Study on relaxing and deepening the reform of capital markets, especially derivatives and futures markets (including index futures and derivatives)
Raw products, tradable index funds, interest rate and foreign exchange futures, interest rate exchange and foreign exchange, etc. ), China People's Bank.
The bank also asked the Shanghai Futures Exchange to develop risk management financial products as much as possible.
At the same time, there are some reports that residents of coastal cities in China have also transferred their US dollar savings in banks.
It has become RMB deposits, and many banks have reported that they want to raise the foreign exchange rate of some residents.
Change it to the "daily limit" of RMB. The local media also reported that for the first time in history, in China,
Dollar bills have become the currency that people "don't want" to hold. The People's Bank of China recently raised the deposit interest rate of US dollars.
Interest rate-its range is very small compared with the adjustment of RMB deposit interest rate in China at the end of 10, which is beneficial to people.
It doesn't have much substantive impact. If this trend continues, it may make the People's Bank of China.
The bank's efforts to further raise the RMB interest rate are complicated.
Current exchange rate mechanism
Allow the floating range of RMB to relax
As JPMorgan Chase pointed out several times before, in principle, the current exchange rate management-China called it "yes".
The floating exchange rate managed by the government "allows the RMB to appreciate to a certain extent without changing the exchange rate mechanism." At this moment
Market commentators often forget that China can relax exchange rate flexibility without announcing "reform"
Exchange rate mechanism. In China, RMB depreciated at 1994, and changed from 1 USD to RMB in 5.7 yuan.
After the US dollar was exchanged for RMB in 8.7 yuan, the RMB appreciated to 8.3, which was formed.
A floating exchange rate mechanism managed by the government. It was not until after the Asian financial crisis that the People's Bank of China finally implemented it.
In this way, we will intervene and transform the "government-managed floating" exchange rate mechanism into a real fixed exchange rate linked to the US dollar.
Rate mechanism. Therefore, the People's Bank of China only needs to change its intervention behavior, and does not need to reform the exchange rate mechanism.
Allow the exchange rate of the US dollar against the RMB to fall again. Theoretically, this situation could happen at any time.
Ask the government department to issue a formal statement.
Considering the rapid depreciation of US dollar bills after the US election, China must decide whether it needs RMB against the US dollar.
A appreciation of about 5%, at that time, China government departments may relax the fluctuation of RMB exchange rate.
Range, or turn to peg to a basket of currencies. In order to prevent further appreciation of the RMB, such action is necessary.
Expected value, especially considering the real effective exchange rate index of RMB in China? REER suddenly because
The depreciation of the dollar has greatly weakened. We believe that China is extremely reluctant to allow the RMB to appreciate substantially at one time.
Steps-This may be the main reason why China has publicly opposed the appreciation of RMB recently. However, the depreciation of the dollar
This trend is somewhat beyond the capacity of China government departments. In the end, China probably couldn't choose a reason.
It's time to change the RMB exchange rate. Considering the inevitability of the weak trend of the US dollar, the earlier the RMB appreciates, it can
The better for China's economy. Under the current US dollar interest rate and exchange rate level, the gradual RMB exchange rate cannot be ruled out.
Possibility of relaxing the floating range of exchange rate.