China raises interest rates to 6.12%

Paul Niven, head of asset allocation at F&C Asset Management, commented: “The move reflects a desire by authorities to cool rampant investment spending and to manage an orderly slowdown in the economy. Investment spending has been rising over 30% year on year and concerns have been increasing over an unsustainable investment boom and accumulation of uneconomic manufacturing capacity. “Furthermore, recent central bank comments relating to concern over rising inflationary pressure and the move to increase currency flexibility have indicated authorities are being proactive in tackling the ris...