The central bank of China has raised interest rates for the fourth time since in the last six months as inflationary pressure continues to threaten the stability of the country’s strong economic growth, according to Reuters. On Tuesday, the People’s Bank of China announced that it would raise the benchmark one-year deposit and lending rates by 25 basis points to 3.25% and 6.31%, respectively. The increase is set to take effect on Wednesday.
The move comes in addition to six increases of the bank reserves rate in the last six months, and lead Xu Biao of China Merchants Bank to speculate that “The March inflation figures must be very high.” Official inflation data for March is to be released on Apr. 15. Biao said, “It is an aggressive move,” and warned that it “may hurt investor confidence and the real economy quite significantly.” Economists are expecting to see consumer inflation at 5.1% in March from 4.9% previously, and more fiscal tightening is expected.