In a surprise announcement, the Peoples’ Bank of China had hiked rates by 25 basis points.
Clearly, China is on a different cycle than most of the rest of the globe. Most of the rest of the world is just starting some version of QE2. China is attempting to bring under control inflation it has created. If China is successful in slowing money growth, it will on a short term basis bring down the hot Chinese real estate and stock markets.
This is actually a very good news. The communists seem to have much more light touch than... the fascists in the Westerns Nations. Raise rate even higher to rid off malinvestments if possible. China has been growing at a very rapid pace for the past 30 years. She need to do some home-fixing quite a bit and slow down in order to put some order in her house. This is also some good news for the commodities investors!
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