China Raises Interest Rates to Curb Credit Boom

Subscribing to the ?everyone else is doing it, so why not us?? school of economics, China has raised interest rates a second time in four months in the hopes of stemming a boom in credit and investment that the central bank said posed pressing problems for the economy.

According to a Reuters story, the deposit rate is now 2.52 percent and the lending rate stands at 6.12 percent.

“The national economy has maintained rapid growth so far this year, and the overall situation is sound, but the problems of over-rapid investment growth and credit expansion and an excessively large trade surplus are pressing,” the central bank said on its Web site.

“The message is: they are trying to do something. Probably the measures are having an effect on some part of the investment story but overall they have to do much more,” said Oliver Stoenner, head of emerging markets research at Commerzbank in Frankfurt.