China Raises Interest Rates For Third Time This Year
2011-07-06 14:15:17
The Chinese central bank raised its interest rates for the third time this year on Wednesday amid high inflationary pressures.
The People's Bank of China raised the benchmark deposit and lending rates for financial institutions by 25 basis points. It was the fifth such adjustment since October last year.
The interest rate on one-year loan was raised to 6.56 percent from 6.31 percent. The one-year deposit rate was increased to 3.50 percent from 3.25 percent. The new rates are effective July 7.
In its battle against stubbornly high inflation, the central bank lifted its reserve requirement for banks six times this year. The ratio for the large banks is 21.5 percent.
On Monday, Chinese policymakers said inflationary pressures remain at a high level and vowed to maintain prudent monetary policy. They also stressed the need for paying close attention to the current international and domestic economic and financial situation.
The National Development and Reform Commission (NDRC) has said that the country's inflation, which hit a 34-month high in May, may have risen again in June. The think-tank expects the rate to moderate in the second half of the year.
According to NDRC, the main reason behind the high inflation rate this year is the carry-over effects from the sharp growth in prices in the second half of the last year. Inflation rose to 5.5 percent in May from 5.3 percent in April.