China has raised interest rates for the first time since 2007 in a bid to stifle inflation and dampen down its overheating property market.
The country's central bank, the People's Bank of China, intends to raise its one-year deposit rate from 2.25% to 2.5%, and its one-year lending rate from 5.31% to 5.6%, with effect from tomorrow.
This withdrawal of stimulus is designed to calm inflationary pressures, especially in the property markets in the country's larger cities.
Global markets fell following the shock policy move, while the dollar rose 1.4% against a basket of currencies as uncertainty pushed investors into the safe haven currency.
The Dow Jones fell 1.03% to 11,028, the S&P 500 fell 0.93% and the Nasdaq was down 1.12% today, while the FTSE 100 slid 0.62% to 5,706.
Miners were hit particularly hard as fears slowing growth in China could hit demand for commodities.
Xstrata, Vedanta, Fresnillo, Kazakhmys and Randgold were the heaviest fallers in the sector.
What made financial headlines over the weekend?
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000