China hikes rates for the third time in three months

Economists expect more hikes to come, but argue that the moves will be moderate as the PBoC has to strike a difficult balance between fighting inflation and fending off speculative liquidity inflows.

China sent its disappointed savers a new year gift last night when the People's Bank of China PBoC hiked interest rates for the third time in just three months in an effort to dampen runaway inflation. Economists expect more rate hikes in the coming months as real deposit rates are still negative.

The PBoC announced late yesterday that the one-year deposit rate and the one-year lending rate will rise by 25 basis points to 3% and 6.06%, respectively. The increases...

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