Meanwhile, on the other side of the Pacific...
From Reuters:
BEIJING (Reuters) - China's high January and February readings for inflation have increased the pressure on the government to take action to counter price rises, Commerce Minister Chen Deming said on Wednesday.
Annual consumer inflation jumped to 8.7 percent in February after hitting 7.1 percent in January, the worst in more than 11 years.
Maybe time to let the yuan appreciate?
Well, this is what I said in December:
"Rising inflation in China may be one of the most underreported stories out there right now. It's very simple. The Chinese government is finding out that when you open up capital markets, you make it harder to sterilize the currency interventions necessary to maintain control over their exchange rate. And it is this simple fact that has for years led me to believe that China can only wait so long before they approach something that resembles a floating exchange rate."
http://www.williampolley.com/blog/archives/2007/12/china_raises_in_2.html
I have for a long time said that China would quicken the pace toward revaluation when it was in their interest to do so, and I have been reporting China's rising inflation and interest rates (and required reserve ratios!) for the past year.
In the rest of the (U.S.) media, this is still on the back page. That will change.
The can reduce their inflation by decrease money supply and in the same time trying to increase interest rate in the economy, that needs both, expansionist and deflationary. Surely that needs veteran economists..