From the New York Times:
China’s central bank raised interest rates on Friday evening, the latest in a series of moves by the government to choke off a binge in speculative lending and investment that threatens to saddle the country’s banks with more bad loans if the economy slows.
The People’s Bank of China raised interest rates for one-year bank loans and bank deposits each by 27-hundredths of a percentage point. Economists had been predicting an interest-rate increase, China’s second this year, after government statisticians announced last month that economic growth reached a torrid 11.3 percent in the second quarter.
The government has already increased restrictions on bank lending policies, raised bank reserve requirements and even reprimanded regional officials who pursue speculative construction projects in defiance of Beijing’s instructions. Chinese officials have hinted at further brakes on the economy in the months to come.[Full Text]
Also see China’s Central Bank Raises Lending, Deposit Rates from Bloomberg News