China’s monetary tightening in 2011 may be mainly in the first half as officials tackle the fastest inflation in more than two years, JPMorgan Chase & Co. and Morgan Stanley said.
The People’s Bank of China increased key one-year lending and deposit rates by 25 basis points on Christmas Day in its second move since mid-October. The change took effect yesterday. China’s stocks fell, erasing earlier gains, on speculation the central bank will accelerate increases in interest rates. Bonds dropped and yuan forwards climbed.
