Chinese central bank raised interest rates on Thursday several hours later than the U.S. Federal Reserve did that, for Beijing is interested in avoiding harmful capital outflows, at the same time trying not to cause any troubles for the economic expansion.
Analysts didn’t expect such an action though the change was mere five basis points, which is rather insignificant and more represents a signal than a substantive measure.
The Bank of China believes it’s a normal market move in view of the Fed’s action that would help retain expectations of interest rate balanced and assist with the deleveraging works. The country’s main stock indexes went down slightly and infrastructure, IT shares slumped following the reports.
This is the first instance for the People’s Bank of China to hike rates since March, though market interest rates have grown by themselves at the time of the interim because the government implements a number of strategies to decrease economic leverage and debt.
Bank of Communications’ Chen Ji holds an opinion that the rate hike was surprising and insufficient for a serious effect, and was nothing else but a reaction to the Federal Reserve’s measure.