China intensifies battle against bubble

The PBoC raises its key policy rates for the first time since December 2007.

China last night surprised the global markets by hiking interest rates for the first time in three years, signaling worries over the fast growing inflation and unreasonably high asset prices in the mainland.

The People's Bank of China PBoC said yesterday evening it will raise the one-year renminbi lending rate by 25 basis points to 5.56% from 5.31%, and the one-year deposit rate by the same amount to 2.5% from 2.25%, effective today. This is the first time that the PBoC has raised its key policy rates since December 2007, but the move follows three 50bp increases in the reserve requirement ratio RRR earlier this year, as well as a targeted RRR hike for...

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