China's central bank surprised markets today with its first increase of interest rates in nearly three years, a move that reflects its concern about rising domestic asset prices and stubborn inflation.
China's central bank is to incrase its benchmark one-year lending and deposit rates by 25 basic points each.
The People's Bank of China said in a statement it will raise the one-year yuan lending rate to 5.56% from 5.31%, and the one-year yuan deposit rate to 2.5% from 2.25%. It said the increase would apply from tomorrow.
The widely anticipated move comes amid growing concerns that the booming property sector could overheat and derail the world's second-largest economy, despite government efforts to curb soaring prices.
Beijing has delayed raising interest rates partly due to concerns it could attract speculative money and thereforce complicating its efforts to keep the Chinese yuan stable.
