BEIJING: China needs to increase interest rates because real rates remain in negative territory, a central bank adviser said on Saturday.
"It's not right to keep real interest rates in negative territory for a long time," Xia Bin, an academic member of the People's Bank of China's monetary policy committee, told reporters on the sidelines of a financial forum in Beijing.
China's one-year benchmark deposit rate is 3.0 percent, below the 4.9 percent inflation rate in January.
"China's whole-year inflation for 2011 is expected to be above 4 percent," Xia added.
He noted that China will have to increase bank deposit reserve requirements further if liquidity remains excessive in the market.
Xia's comments come the day after China's decision to raise lenders' required reserves by 50 basis points, effective Feb. 24 and its second increase this year.
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