The second half of 2006 is a time when
central banks around the world are wielding interest rate sticks. From the end
of June to mid-August, the central banks of the United States, Japan, the
Eurozone, the United Kingdom, Australia and South Korea successively raised
their benchmark interest rates. China is no exception. This year alone, the
People's Bank of China raised the statutory deposit reserve ratio twice, the
RMB loan benchmark interest rate twice, and the RMB deposit benchmark interest
rate once. For China's central bank, which has always pursued a prudent
monetary policy, such frequent monetary policy actions are rare.
The original intention of this round of
global interest rate hikes is to curb the inflation risks that may be caused by
economic overheating, and the main force behind this inflationary trend is
international crude oil prices. This rising cycle of international crude oil
prices began in 1998. At the beginning of 1998, the price of a basket of crude
oil from the Organization of the Petroleum Exporting Countries (OPEC) was at a
historic low of US$12.28 per barrel. In 1999, the price of crude oil exceeded US$20
per barrel. , exceeded US$30 in 2003, US$40 in 2004, US$60 in 2005, and now
stands above US$70 per barrel, approaching the peak during the "oil
crisis" in the 1970s.
Cost-push inflation caused by high oil
prices has become a lingering haze on the minds of central banks, forcing them
to raise the sword of monetary policy in an attempt to prevent it.
Unfortunately, high oil prices have rigid
structural problems. The reasons for high oil prices include insufficient
supply of crude oil, depreciation pressure on the U.S. dollar, and unstable
political situations in oil-producing countries. The interest rate method can
only indirectly reduce the consumer demand of oil importing countries by
reducing GDP growth. However, under the combined effect of multiple factors, it
is difficult to achieve the expected effect of raising interest rates.
First of all, crude oil prices are not only
affected by demand, but also by supply. It is an equilibrium result of the
two-way behavior of supply and demand.
Generally speaking, the behavior of oil
exporting countries follows the following rules: when oil prices fall, in order
to ensure stable export revenue, oil exporting countries tend to increase
production and exports; when oil prices rise, due to rigid demand, they tend to
expand output It will suppress prices, and oil exporting countries will
generally control production at this time in order to achieve higher profits.
In other words, although raising interest
rates can suppress oil demand to a certain extent, if the supply is controlled
at the same time, the result of the two effects is that the supply and demand
situation of oil does not change and the price is rigid and firm.
Secondly, the only pricing currency for
global oil transactions is the U.S. dollar. Therefore, in addition to the
relationship between supply and demand, the factors that affect oil prices
include the strength of the U.S. dollar. According to expert estimates, the
correlation coefficient between crude oil prices and the value of the U.S.
dollar is -0.7. This means that the weaker the value of the U.S. dollar, the
higher the oil price. Now that this condition is met, the mid- to long-term
depreciation trend of the U.S. dollar is basically established. Because of
global economic imbalances and the huge twin deficits (fiscal deficit and
current account deficit) of the United States, they are getting worse.
At present, the Iranian nuclear crisis and
the Israel-Lebanon conflict have made the international political and security
situation in the oil-producing countries in the Middle East even more
confusing. Many people believe that this instability in oil-producing countries
will push up oil prices, but this view may be a misunderstanding to some
extent. In fact, before a conflict breaks out, market prices have often priced
in the risks and fluctuations that may arise from the conflict. The
international community is well prepared to deal with sudden oil shortages.
Therefore, speculative forces tend to push up oil prices before a conflict
breaks out; but after a conflict actually breaks out, oil prices may fall
sharply.
In fact, raising interest rates is just a
means of total control under normal conditions, while high oil prices are
essentially a structural problem. Therefore, it is difficult for global
interest rate hikes to shake the high oil prices, and the reality of market
evolution gives us the best answer.