China's fifth interest rate hike surprises analysts

The Chinese government has raised interest rates for the fifth time since October, despite concerns tightening measures are dampening economic growth.

The People's Bank of China increased benchmark 12m lending and deposit rates by 25 basis points, taking them to 6.56% and 3.5% respectively. The move has taken analysts by surprise, although they were expecting one more rate rise this year, it was not expected to come so soon, according to Mark Williams, senior China economist at Capital Economics. The announcement could add to growing concerns that policy makers are tightening too much and efforts to combat inflation will push China's economy into a hard landing. According to Williams, the higher borrowing costs from banks will ha...