Earthquake in China

In a much awaited move, the Chinese authorities managed to surprise the markets by
raising their interbank rate 27 basis points to cool their overheated 10.2 %
y/y growth in 06Q1. The usual centralized broadcast of orders to banks to
curtail specific loans was expected, maybe an increase in loan requirements or
even furthering land restrictions for real estate development; but not the free
market economic reign-in liquidity tool of raising rates.

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