According to the National Bureau of Statistics of China, China's consumer prices rose 3.3% year-on-year in July and 3.5% in August. Inflation also maintained a high level at 3.6% in September. Inflationary pressure is expected to continue on an upward trajectory due to the burden on the Chinese government in promoting a further tightening of monetary policy on concerns of a possible double-dip recession.

Against this backdrop, the People's Bank of China announced on October 19 that it will raise its benchmark one-year lending and deposit rate by 0.25 percentage point immediately after the Fifth Plenary Session of the 17th Central Committee of the Communist Party. Although the degree of the hike is small and will not likely lead to a shift in the central bank's overall stance, it still reflects a change in China's economic development policy, that is, a shift in the economic development strategy from solely promoting economic growth to "putting people first."

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