Thursday, 14 December 2017

China's central bank raises interest rates after Fed rise

China's central bank has followed the US Federal Reserve by raising interest rates, in a move that has surprised economists.

The People's Bank of China lifted its 7-day and 28-day reverse repurchase agreements by 5 basis points.

This essentially represents a modest rise to borrowing costs and is the first rate hike since March.

Beijing is attempting to limit the flow of capital out of the country without harming economic growth.

In addition to short-term borrowing rates, China also increased rates on its one-year medium-term lending facility by 5 basis points.
China described the move as a "normal market reaction" to steps taken by the Federal Reserve.

The US central bank raised rates by 0.25% on Wednesday, its third rate rise this year.

The Fed said the move, which was widely expected, underscored "solid" gains in the US economy.

BBC      News.