China Delivers Yet One More Rate Hike

You have been reading all year that China has been hitting the brakes to curb inflation and to fight an overheating economy.  They are at it again.  Now the People’s Bank of China has raised its benchmark interest rates yet again.

The PBOC raised its deposit and lending rate by 0.25% today, effective July 7, 2011.  This marks the third hike of 2011 and the fifth hike in this cycle, with the new lending rate at 6.56% and the Yuan deposit rate going to 3.50%.

Local newspapers and news outlets in China of late have seemed to set the tone that this was coming.  The wording has also been thrown out over and over about China seeking to maintain a stable Yuan at a “reasonable and balanced level” on the PBOC website.

If China is still tightening, you might as well go ahead and expect that India will be shortly behind it.

JON C. OGG