People’s Bank of China surprises with interest rate rise

| October 19, 2010 | 0 Comments
People's Bank of China surprises with interest rate rise

The People’s Bank of China has today surprised markets after hiking interest rates - the first such move since 2007.

The Bank has increased the one-year yuan lending rate from 5.31% to 5.56%, and the one-year yuan deposit rate to 2.5% from 2.25%.

The move comes in a bid to fight stubborn inflation, as well as fears over China’s property market.

Many analysts described the move as “hasty” and it comes just two days before China is scheduled to publish its third quarter economic growth figures and CPI data.

In related news, currency tensions continue between China and the US.

The US has been pressuring China to let the value of its currency, the yuan, appreciate against other currencies.

In June, Beijing loosened its currency peg and, while the move was welcomed, the US recently remarked that the yuan had appreciated just 2.65% against the dollar since that time.

The US argues that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.

Tags: currency tensions, , , , People's Bank of China

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