Many countries, especially the U.S., have been pressuring China to allow its currency, the RMB or yuan, to rise to a level that many agree is more accurate and fair. However, China has been resisting because in keeping their currency artificially low their exports look more favorable to consumers abroad. this export trade is what is fueling China's 8-10% GDP growth for the past decade or so - a source of much pride for the government and possibly the one thing that is keeping their democratic leaning population from resisting their tight control.
Now, China has maybe found a way to tame its economy and appease other countries without raising the price of its currency.
Today China announced that it will raise the price of interest rates to hopefully "dampen inflation and cool off the country's hot property market". This is the first indication that "Beijing is having difficulty managing the country's growth"
The announcement had immediate affects on markets and stock exchanges worldwide - the major Wall Street stock indexes are down sharply already. Oil prices also reportedly fell right away.
The Chinese central bank said it would " raise the benchmark one-year lending and deposit rates by 0.25 percentage points. Deposit rates will rise to 2.25 percent, and a key lending rate will climb to 5.56 percent."
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