Australia rate hike impact on China

Australia's second loan rate hike has fueled concern that other central banks may follow suit. Israel, Norway, and India have already increased their rates after Australia's first rise. Will China also join them, and what's the possible impact?

Wen Bin is a foreign exchange researcher at the Bank of China. He says Australia's loan rate hike is fueled by the government's judgment of economic prospects. A general world-wide interest rate hike still depends on the US Federal Reserve taking the lead.

Wen Bin, Forex Researcher of Bank of China said "China's consumer price index is expected to turn positive by the end of this month. Next year, inflation in the country may be moderate. We do not expect tight monetary policy before the end of the first quarter next year. That's when interest rate rises or bank reserve rate hikes can be expected. We do not expect any big change by the end of this year."

For ordinary Chinese people, the stronger Australian currency will increase expected returns from wealth management products.

Investor of Wealt Management Products said "The Australian dollar rate has increased, so I expect higher returns from wealth management products based on the exchange rate."

Investor of Wealth Management Products said "If I put my money in a savings account, the three month return is just above one percent. Australian dollar-based products offer above two percent. Much better."

However, Wen Bin warns that some Chinese enterprises could be hit by the Australian rate rise, especially steel mills, which are negotiating iron ore prices.