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China may need rate hikes to avoid inflation, says ADB

China should boost interest rates or allow its currency to strengthen to help curb inflationary pressures, the Manila-based Asian Development Bank (ADB) has said.

China, like most Asian countries, boosted government spending and slashed lending rates last year to help spur economic growth amid a global recession. The region’s policymakers are now mulling how much to ease stimulus spending and raise rates to keep their economies from overheating.

"Over the next 12 to 18 months, interest rates may need to rise significantly depending on how exchange rate policy is handled," the development lender said in a semi-annual policy report on emerging East Asia released in Singapore.

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