Interest rate rise positive for a 'sustainable' China

The interest rate rise in China last week, which initially unsettled global equity markets, has been seen by managers as a positive move for the sustainability of the burgeoning economy.

Jupiter’s Philip Ehrmann and Veritas’ Ezra Sun believe the Communist state will continue to raise interest rates to sustain growth and control inflation, however they concede it could heighten volatility in the market. The People’s Bank of China (PBoC) surprised with an increase of 0.25%, the first time in three years it has raised lending and deposit rates. Ehrmann, manager of the £286m Jupiter China fund, said there may be further rate rises next year as China seeks to move to more normal monetary conditions. “The move appears to be a reflection of the recovery in activity follow...