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The Million-Dollar Question: Did China Raise Interest Rates?

By Wang Yuqian

(Beijing) — Has China’s central bank raised interest rates or not?

The answer depends on whom you ask. But the question is important, not only because it illustrates how markets and policymakers can view the same events differently, but because it sheds light on the conundrum faced by the central bank.

The People’s Bank of China needs to curb capital outflows and rein in asset bubbles, goals that require higher interest rates. But it also needs to prevent debt from ballooning and bringing down the economy — which means it cannot raise interest rates.

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