|Published : 16 Mar 2017, 15:00:41|
China lifts short-term rates to steady
China's central bank raised short-term interest rates on Thursday in what economists said was a bid to stave off capital outflows and keep the yuan currency stable after the Fed rates overnight.
The increase in short-term rates was China's third in as many months, and came a day after the end of the annual session of parliament.
Hours earlier, the Fed raised its benchmark policy rate, as had been widely expected, and signalled more hikes were on the way as the US economy picks up steam.
"The timing says it all. China is no longer insulated from the Fed and, more generally, from international financial conditions," said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis.
Some analysts had expected another money market rate rise as China looks to contain risks from years of debt-fuelled stimulus and make it more costly for speculators to bet against the yuan.
China has cut its economic growth target to around 6.5 per cent this year as leaders pledge to push through painful reforms to address high debt levels and erect a "firewall" against financial risks.
Economists polled by Reuters earlier this year expected China would keep its benchmark lending rate steady through at least the second quarter of 2018, according to Reuters.