China Raises Interest Rates to Combat Inflation, Excessive Liquidity

China's benchmark one-year lending rate has increased to 6.06 percent from 5.81 percent, and the one-year deposit rate has risen to 3 percent from 2.75 percent, says the People's Bank of China (PBOC).

 

Effective February 9, the increase is part of the government's efforts to drain excessive liquidity and tame surging inflation.

 

"The risk of rising inflation cannot be neglected because major economies are expected to shore up their growth by maintaining an easy monetary stance. As a result, a large amount of capital flows into emerging economies," say the central bank in a report published on Jan 30.

 

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