(12PressRelease.com) “Torino Group†says that, Chinese authorities simply cannot tolerate 5.1% inflation and rates must rise.
“Torino Groupâ€, the Europe-based investment house thought to have taken short positions on key indices in anticipation of worse-than-expected November inflation data from China, may have their prescience rewarded after estimates of 4.7% were proven optimistic.
Despite bank lending curbs and sales of state food stockpiles, inflation still came in at 5.1% and raised the likelihood of interest rate rises which
“Torino Group†sources had said would almost certainly have a negative impact on equity markets.
China needed to keep its economy growing at a minimum of 8% in order to provide employment for hundreds of millions of workers in the face of the crippling global recession that decimated demand for their exports abroad.
A “Torino Group†analyst said, “China‘s monetary and fiscal stimulus kept things bubbling along a little too well and now they‘ll have to stand on the brakes but if they lock the wheels, there‘ll be an almighty crash.â€
Food prices rose 11.7% in November from 12 months earlier and utilities like water and electricity showed significant increases. Global markets, which currently seem to be lacking direction, are expected to react negatively to the numbers if investors think the country‘s central bank will hike rates by more than 25bps.