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The People's Bank of China announced on the evening of October 19th that, starting from October 20th, 2010, the benchmark interest rates for RMB deposits and loans of financial institutions will be increased.

Among these, the one-year deposit benchmark interest rate for financial institutions will be raised by 0.25 percentage points, increasing from the current 2.25% to 2.50%; the one-year loan benchmark interest rate will also be raised by 0.25 percentage points, increasing from the current 5.31% to 5.56%. Except for the unchanged活期 deposit interest rate, the benchmark interest rates for all other tiers of deposits and loans have been correspondingly adjusted.

This is the first interest rate hike by our central bank in three years. The most recent interest rate increase by the central bank was in December 2007. In 2007,...