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Chinese rate hike shows world economic misbalance - Korishchenko(Interfax News Agency Via Thomson Dialog NewsEdge)MOSCOW. April 28 (Interfax) - The panic stirred by China's decision to raise its benchmark interest rates from 5.58% to 5.85% on most currency, stock and commodity markets has once again highlighted major misbalances in the world economy, Russian Central Bank deputy head Konstantin Korishchenko told Interfax on Friday. "As far as I understand, yesterday's move is a somewhat superficial factor. If a car that has a technical problem hits a bump and breaks down, the problem is the car's malfunction, not the bump. The news from China was the 'bump' that the global economy has hit and that reflects its misbalances," he said. The U.S. trade deficit, rapidly growing foreign reserves in a large number of countries, and policies being pursued by various central banks to tackle local problems all contribute to the situation, Korishchenko said. "At the same time, one frequently overlooks the fact that today financial markets are global markets, and any monetary contraction or expansion in one place immediately influence markets around the world," the official said. Moreover problems related to the World Trade Organization and contradictions between the globalization process and measures by the local authorities to prevent the sale of their assets to foreign holders cannot be ignored, Korishchenko said. World economic trends continue to influence Russia, he said. "Unfortunately, Russia's economic and financial system are relatively small. We are still sensitive to various negative trends in the world that spread to various countries via financial markets," Korishchenko said. The news from China caused raw material prices to decline. Oil prices dropped by 1.6% in New York and copper prices fell by 3.6% inLondon. The RTS index dropped below 1,640 points after a surge spurred by trading in shares of UES (RTS: EESR), Sberbank and Gazprom on Thursday morning. tm jh |