China Surprises With First Rate Increase Since 2007

With inflation pegged at 3.6 percent, the People’s Bank of China announced on its website that it will increase the one-year benchmark lending rate from 5.31 percent to 5.56 percent. The rate for interest paid on deposits will also increase rising to 2.5 percent from 2.25 percent.

The central bank “wants to stay ahead of the inflation curve,” said David Cohen, a Singapore-based economist at Action Economics. “China’s economy seems to be getting back on track and the inflation rate seems to be creeping up.” He expects another rate increase before year-end.

Source: Bloomberg

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