China watchers should be enjoying thinking about the questions that this news raises:
Oct. 28 (Bloomberg) — China’s central bank jolted global financial markets by raising its benchmark interest rates for the first time in nine years to cool the world’s fastest-growing major economy.
Will this be effective in reducing inflationary pressures in China? Will it require the Chinese CB to increase their purchases of US bonds (since private Chinese investors will be even less interested in holding US bonds now)? Does it signal a new agressiveness in tackling inflation that could also lead to a revaluation of the yuan? So many questions…