China raised a key interest rate Wednesday for a third time this year as it tries to cool surging inflation.
The benchmark rate for one-year loans will be raised 0.25 percentage points to 6.56 percent, effective Thursday, the central bank announced. The rate paid on deposits will rise by a similar margin to 3.5 percent.
Inflation hit a 34-month high of 5.5 percent in May and is believed to have risen further in June even as an overheated economy cools gradually under the pressure of investment curbs and other controls.
The slowdown in some industries has prompted fears more interest rate hikes might trigger a sharp slump. But most analysts say the government should be able to avoid that.
THIS WILL TRIGGER A SLUMP AS SURE AS QE2 IS TRIGGERING INFLATION HERE.
WHEN THE CHINESE BUBBLE BURSTS, THE WORLD WILL GO INTO ANOTHER RECESSION. SOME SAY THIS MIGHT NOT HAPPEN UNTIL 2013.
I SAY IT WILL HAPPEN SOONER, PERHAPS TRIGGERED BY THE EURO COLLAPSE, OR A BAD US DEBT DEAL.