China raises rates, India spells out why its necessary

China raised both its lending and deposit rates by 25 bps to 6.31% and 3.25% respectively. The 3.25% though compares with the Feb y/o/y CPI of 4.9%, thus the PBOC is far from tight in their policy. China is continuing the fight that many other nations have taken to attack inflation pressures that do great damage to an economy. The terms of the battle were well put by the deputy Gov of the Reserve Bank of India, who will raise rates again in May and said “Rising interest rates are making your projects little less attractive, making you little less inclined to invest, but the alternative to that will be a meltdown. So, a little bit of pain now, a little bit of medicine now, with the prospect of less suffering in the future is the way to look at it.” Bernanke said nothing market moving last night as while he’s watching inflation “extremely closely,” he still thinks the rise in commodity prices is “transitory.” Bottom line, some central bankers are acting preemptively while others are hoping with fingers crossed.

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