Central bank raises interest rates

According to a press release on the central bank’s website, the board considered the economic and financial conditions at home and abroad. Myriad uncertainties facing the global economic outlook could dampen the domestic growth momentum, it said. For the domestic inflation outlook, however, the recent Russia-Ukraine conflict and the consequent price surges in global energy items and other commodities impose considerable imported inflation pressures. The annual growth rate of the CPI has stayed over 2% for consecutive months and will likely remain so towards the third quarter of the year, while that of the core CPI has also increased, both pointing to a persistent trend of elevated inflation. Furthermore, the domestically-oriented services sector that took a greater hit from the pandemic has gradually rebounded and the labour market conditions have continued to improve. Meanwhile, some economies, including the United States, have begun to raise policy rates. In this view, the board judged that a rate hike would help contain domestic inflation expectations and achieve the policy objectives of price stability and sound financial and economic development.