THE People's Bank of China's research department raised its economic growth forecast yesterday and said inflation will probably accelerate to 4.6 percent this year.

The economy may expand 11.6 percent this year, according to the report published in the China Securities Journal, faster than the agency's June estimate for a 10.8-percent expansion.

Inflation this year will quicken to 4.6 percent from 1.5 percent in 2006 and up from the 3.2 percent forecast previously. The trade surplus will widen to about US$250 billion this year from US$177.5 billion in 2006.

The forecasts put pressure on central bank Governor Zhou Xiaochuan to raise lending and deposit rates for the sixth time this year to cap surging asset prices and cool the overheating economy, said Bloomberg News.

The bank on Thursday raised interest rates on some home mortgages and increased minimum down payments in an effort to cool property price gains.

"The central bank may need to raise key interest rates again" to cool inflation, said Tao Dong, chief Asia economist at Credit Suisse Group in Hong Kong. "In three months from now, the economy will be cooler than it is right now."

The government is also concerned that a surge in lending is creating a bubble, which would drive up bad loans should it collapse. Investment in real-estate development jumped 29 percent in the first eight months of this year.

The rate on loans for second homes and on commercial real estate was pushed to at least 1.1 times "benchmark" rates that the People's Bank of China didn't specify in a statement at midnight on Thursday. Buyers will have to pay not less than 40 percent of a property's value as down payment, up from 30 percent.

Until now, banks were barred from charging less than 90 percent of the benchmark rates for mortgages. Interest rates on loans for first homes are unchanged.

The decision by the central bank and the China Banking Regulatory Commission is "to prevent credit risks and protect the borrower's repayment ability," according to the statement on the People's Bank of China Website.