However, Shenyin Wanguo Securities chief analyst Gui Haoming put the timeframe in July or August. The central bank raised the interest rates just in mid-may and it usually will wait some time to see the feedback before another move, making rates hike in June unlikely, Gui explained.

Qiu Yanying of TX Investment Consulting Co. echoed Gui's points. Qiu expected the central bank to wait until next month's CPI is released before deciding on further interest rates hike.

Interest Tax

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Several analysts called for the abolition of the 20 percent tax on interest accrued from bank deposits. "The adjustment of interest tax should precede an interest rates hike," said Guotai Junan Securities analyst Lin Zhaohui.

The high interest tax rate erodes the effect of interest rate hikes, thus should be adjusted, he explained.

Abolishing the tax is feasible, according to Ha Jiming, chief economist of China International Capital Corporation.

China raked in 45.9 billion yuan in interest tax last year and the stamp tax hike announced last month is expected to add 280 billion yuan to the government's revenue, thus the canceling of the interest tax will not affect fiscal revenue much, Ha noted.

Stock Market

The analysts are divided on the impact of an interest rate rise on the stock market, which is gradually recovering after a series of slumps caused by the stamp tax hike announced on May 29.

The influence on the equity market will be limited, as an interest rates hike was expected, said Gui Haoming.

However, other analysts thought the market is currently at a sensitive period and an increase in interest rates will probably result in wilder fluctuation. They also pointed to the weak performances of banking stocks in the last few days, which they said was caused by expectation of a rates hike.

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