China Raises Rates After Fastest Growth in 12 Years

" China raised interest rates for the third time since March to cool the fastest pace of economic growth in 12 years and restrain inflation.

The benchmark one-year lending rate will rise by 0.27 percent point to an eight-year high of 6.84 percent tomorrow, the People's Bank of China said. The deposit rate will increase by the same amount to 3.33 percent and a tax on interest income will be cut on Aug. 15 to encourage saving.

Premier Wen Jiabao aims to slow lending and investment fueled by record exports after China announced second-quarter growth of 11.9 percent yesterday. As well as raising interest rates, the government has ordered banks to set aside larger money reserves five times this year. Consumer prices rose the most in 33 months in June, factory and property spending have surged, and the key stock index has almost doubled in value this year. "

Source: China Raises Rates After Fastest Growth in 12 Years (Update5) (http://www.bloomberg.com/apps/news?pid=20601087&sid=aDXmePVdZC4A&refer=home)