China lifted interest rates for the fourth time this year on Tuesday in a move underlining the government’s concern over rising inflation, which reached a 10-year high in July. Although the rising prices are mainly attributed to staple food shortages, the central bank has become increasingly hawkish about the broader threat of inflation. The People’s Bank of China lifted the deposit rate by 27bp, and the lending rate by only 18bp, a differential which signalled its priorities. Although the higher deposit rates might squeeze banks’ margins, the PBoC said the rise was necessary.

This entry was posted by Gwen Robinson on Wednesday, August 22nd, 2007 at 5:39 and is filed under Capital markets. Tagged with china. Edit this entry.