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For First Big Rate Rise, Look to China

Investors around the world are trying to gauge the moment when the world's major central banks begin to push interest rates back up from historic lows. Which country raises first and fastest may set the tone for the global tightening of liduidity.

China could lead the rate-hiking parade and be set to raise in the first half of this year, according to Christian Nolting, regional head of portfolio management and lead strategist Asia Pacific from Deutsche Bank Private Wealth Management.

"We think maybe it happens in the second quarter. So China will be in this year one of the major central banks to hike first," Nolting said Tuesday.

- Watch the full interview with Christian Nolting above.

China's central bank will have to be extremely cautious not to spook investors when it does raise, Nolting pointed out. If investors are taken by surprise it could be negative for stocks, he added.

The People's Bank of China signaled it was preparing to tighten monetary policy in its open market operations Tuesday due to growing fears about inflation.

Nolting said he thinks the Federal Reserve will raise in the second half of 2010, followed by the European Central Bank.

Jordan Kimmel, market strategist from National Securities, told CNBC that the Fed should not wait to raise, but hike rates toward 2 percent in the near term.

"I disagree that they need to leave rates at zero… We can go to 1-2 percent frankly and still have a strong economy," Kimmel said.

Low interest rates create a problem for pension funds and "people looking for income in conservative investments," he said.

"I think things are turning faster, things have stabilized, real estate has stabilized and I think it's time to take the economy off life support," he said.

- Watch the full interview with Jordan Kimmel here >>>

St Louis Federal Reserve Bank President James Bullard told CNBC that U.S. rates will likely stay low for an extended period because inflation is expected to remain subdued.

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