Since the first half of this year people have been talking hotly about the bank interest-raise, which finally came to light on 28 October. With the approval of the State Council the People's Bank of China decided to raise the standard interest rate of the people's currency as from 29 October onwards. This is the first time for China to raise the deposit interest-rate in 10 years time. The bank interest-raise has everything to do with the daily life of the rank and file. But what is the actual influence of the bank interest-raise this time that plays on the daily life of the populace? The author had an opportune time of interview with several personages in the economic circle.

Stabilize bank-savings and increase of interest rate

"The interest-rate is the basic instrument often resorted to for minute adjustment in the macro-control and the relatively mild interest-raise this time won't be able to rouse a fluctuation in the public production and life of the people." He Fan, assistant to director of the World Economy and Politics Research Institution of the Chinese Academy of Social Sciences said: "but the interest-raise is a signal and will exert an impact on the mind's eye of the people."

For the bank to raise deposit-interest rate, it is good for raising the income of the people from the deposit-interest. Xiao Zhuoji, an economist said, in view of the adjustment scale, the one-year deposit interest-rate was only raised 0.27 percentage point, namely from the present 1.98 percent to 2.25 percent. Whereas the raise of interest-rate for medium-and-long-term deposit is bigger than the short-term one and this will be good for guaranteeing the income of the people from their medium-and-long-term deposit interest.

The interest-rate adjustment this time caters to the present economic operation and is good for stabilizing the savings of the people in the bank said Guan Tongwei, researcher on macro-control economy of the Guangdong Development Bank. For the moment, the savings of the people in the bank have witnessed a drop of consecutive seven months and the deviated flows of the savings have roused extensive attention of the economic circle. So the adjustment of interest-rate is good for raising the income of the families of low and medium income and is also good for stabilizing the deposits in the bank.

The interest-raise entails the reaction of the stock and foreign exchange markets and this is hardly avoidable and will affect the investment of the people. Generally speaking, the bank interest-raise is easy to incur a downturn in the stock market. However, this has been predicted beforehand, and so there won't see any excessive reaction. It won't incur a big impact on the stock market as estimated, said Xiao Zhuoji, and the fluctuation of the stock market at present is not mainly caused by the interest-raise.

Stabilize prices and put a check on inflation

As an economic means for regulating the macro-economic operation the bank interest-raise this time will play a pivotal role in helping adjust prices, putting a check on the price hike. This is a well-chosen time for the adjustment of the interest-rate, said Chen Dong, director of the China Galaxy Securities Research Center. If we take a look at it from an economics point of view the price hike has things to do with the overheating of economy. And the threat of inflation is obvious there and the present interest-rate has actually become a "minus interest". This has rendered a great impact on the economic life and production, leading directly to the overheated investment in real estate while the savings of the people are going down which has to be urgently regulated by introducing the interest-raise policy.

Guan Tongwei said, the adjustment of the interest-rate is mainly for consolidating the achievements obtained in the macro-control and adjustment at present and also for putting a check on the inflation. At the present moment, we've witnessed a continuous rise of grain price, a strong re-rise of realty price and a price-rise of the world crude oil in a short time. All these will incur a general uprise of prices and so the adjustment of the interest-rate is a must for a check on the inflation.

As the statistics of the State Statistic Bureau indicate, September saw the consumption price of the residents to rise by 5.2 percent as against the same period before and the consumption price also witnessed a rise of 4.1 percent in the previous 3 quarters over the same period before.

Since the beginning of the year the prices for raw materials, grain and crude oil have been on the rise. Chen Dong said, the up-adjustment of interest rate is a correct reflection of the price level at present. This will help make a further smooth turn in the capital cost and price system, thereby putting a check on the inflation, which is good for the life of the people.

A little rise in monthly supply of housing-and-auto-loans

The interest rise has exerted an overall influence on the consumption loans. For those using loans to buy houses and autos the uprise of the bank interest-rate has slightly increased their burden in paying back but only within a limited extent and so there is no need to be too much worried. Moreover, the repayment interest-rate of the housing loan is to be adjusted on a yearly basis, and so there won't see any interest-raise for the repayment of housing loan within the year.

According to the interest-raise extent this time, the individual house loan using the accumulated funds, the interest rate for a loan of over 5 years and above is going to be raised from 4.05 percent to 4.23 percent, a rise of 0.18 percentage point. For the self-operated individual house loan, the interest rate for a loan of over 5 years and above is to rise from 5.04 percent to 5.31 percent, a rise of 0.27 percentage point.

Chen Dong said the interest-rate adjustment this time for individual house loan using accumulated funds and for the self-operated house loan by using that from commercial banks the uprise extent is lower than the standard interest-raise extent. This is on the one hand good for balancing the demand and supply and healthy development of house properties and on the other proves beneficial to property purchasers in the use of loans.

With regard to the influence on the real estate market, Feng Lun, chairman of Wantong Group expressed, the raise of interest-rate should not be able to exert much influence on the market for medium and high grade buildings. A proprietor who's able to buy a property at a cost of nearly 10000-yuan for one square meter will not be very sensitive to the change of the interest-rate. However, despite the adjustment of the interest-rate for deposit Feng Lun is more concerned about whether there's any new change in terms and conditions for the real estate loans.

"The raise of the interest-rate this time is most likely to effect an influence on the buildings of low prices." Feng Lun said: "from an overall judgement, buildings of medium and high prices will tend to be more stable along with the adjustment of the interest-rate while buildings at a low price level may possibly see a downturn."

By People's Daily Online