Anonymous, You think slower growth is the main risk and concern in China and that, because of that, policies against inflation, if they are needed, should not be in the form of an interest rate hike. I agree appreciation is helpful in toning down inflation pressures, especially those coming from in internationally, like those of energy and other raw commodities. I do not have a very strong opinion on whether the bottom line monetary policy stance is tight enough or not tight enough (an I do not think the current bout of inflation was caused by excessively loose monetary policy). However, China's use of unorthodox monetary policy instruments like credit controls create distortions. Thus, I would prefer to see more of the monetary policy action done by interest rates instead of credit controls. Indeed, to me the 16 % yoy or so credit growth in China is not intimidating. But deposit interest rates are sharply negative in real terms, and even lending are still negative in real terms. That does not seem appropriate for an economy that still grows rapidly and where inflationary expectations need to be contained.