"Foresight Cup" forecast: January CPI 5.0% alert against inflation counterattack

After the CPI hit a high of 5.1% in November 2010, agencies generally believe that the CPI in December will fall back. The forecasted CPI growth in December is 4.1%, which is a decrease of 1 percentage point from the actual value in November. On January 5, the 14 agencies participating in the “Foresight Cup” forecasted an average CPI growth of 5% in January 2011, indicating that the future inflation situation is still not optimistic.

Li Gang, head of research at the Agricultural Bank of China’s Financial Markets Department, told reporters that the CPI rebounded in January and is expected to be 5.2%. The Spring Festival and hikes will push up the CPI in January. According to previous years' experience, the Spring Festival factors will push the CPI by 0.8-2 percentage points.

In the report, Zhu Jianfang, chief economist of CITIC Securities, believes that there will be strong inflationary pressures in early 2011. The current increase in food prices is mainly affected by expected price increases, and the supply shortage is not very serious. If future expectations change, , may lead to price increases and slow down. As the current rise in food prices is expected, companies have increased the inventory of food raw materials, which in the short term will increase the pressure of rising food prices.

Regarding the monetary policy before the Spring Festival, the institutions expect the one-year deposit interest rate at the end of January to be 2.75%, which indicates that the agency believes that the possibility of raising interest rates before the holiday is reduced. Li Gang believes that since the actual data of January CPI was announced after the Spring Festival, and the factors of the Spring Festival are also expected by all, the central bank has raised interest rates twice in the fourth quarter of 2010. It is also necessary to observe the effect. Therefore, before the Spring Festival, the central bank will continue to increase the deposit reserve ratio and the possibility of raising interest rates will decrease.

The forecasted average of institutions participating in the "Foresight Cup" also showed that the growth rate of M2 in January 2011 was 18.4%, which was 1.1 percentage points lower than the actual value in November. Guo Tuan Securities macro analyst Wu Tu Jin interviewed by reporters said that due to the rapid growth of M2 in early 2010, under the influence of the base effect, in January M2 will naturally fall back. In addition, the central bank has announced the target of controlling the growth rate of M2 at 16% in 2011. The recent tightening of monetary policy will also result in a decline in the growth rate of monetary liquidity in early 2011.

In January 2010, the M2 was 62.51 trillion yuan, a year-on-year increase of 25.98%.

Zhu Jianfang believes that the regulation and control of monetary credit will not be the same throughout the year, and will be adjusted according to the inflation situation. He pointed out that the inflationary pressure will be somewhat weakened in the second half of 2011, and the control rhythm of money and credit will also be fine-tuned, and the control efforts will be relaxed.

Institutions participating in the prediction of the “Foresight Cup” include Guosen Securities, Everbright Securities (601788.SH), Guotai Junan Securities, Development Research Center of the State Council, Haitong Securities (600837.SH), CITIC Securities (600030.SH) and Bank of China (601988.SH). / (03988) HK, CSC, China Banking International, etc.

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