Why has China raised interest rates now?

Kamil Molendys, Unsplash

October 2010. The People’s Bank of China has surprised markets by raising Chinese interest rates for the first time since December 2007. Recent economic reports have provided no conclusive reason for raising rates at this time, particularly as the increase is only expected to have a very limited economic impact. In this paper we look at the possible reasons for the rate increase and assess the outlook for the Chinese economy.