Big move today from the master currency-manipulators of the world. :roolleyes:
Surprise Move by China on Rates Rattles Markets THE NEW YORK TIMES October 19, 2010
BEIJING — A surprise announcement by China’s central bank that it would raise interest rates for the first time in nearly three years jolted world financial markets Tuesday, as investors worried that China, the world’s second-largest economy after the United States, could slow and crimp the global recovery.
“Any time China tries to tighten the reins on their economy, it will have a ripple-down effect on the rest of the globe,” said Brad Sorensen, the director for market and sector analysis at the Schwab Center for Financial Research.
The Dow Jones industrial average declined 165.07 points, or 1.48 percent, while the Nasdaq composite index fell 43.71 points, or 1.76 percent.
China’s effort to take control of its galloping economy contrasts sharply with economic policies in developed nations like the United States, where officials are trying to spur growth by keeping interest rates low. In Washington, the Federal Reserve declined to comment, in keeping with its policy of not remarking on the actions of other central banks.
“This move is symbolically huge,” Dong Tao, a Hong Kong-based economist at Credit Suisse, said by e-mail. “Yet it may only have limited impact on the real economy because overall rates are still at excessively low levels. This move probably will dampen sentiment in the property sector and equity market in the short run. However, we think excess liquidity will still prevail, if this is just a one-off rate hike.”
