China Rate Move May Lure Capital, Complicating Policy

China’s decision to raise interest rates to combat inflation may have the opposite effect by luring more capital into the world’s fastest-growing major economy.

The central bank yesterday unexpectedly raised borrowing costs for the first time since 2007, lifting the benchmark one-year lending rate to 5.56 percent from 5.31 percent. The deposit rate was increased to 2.5 percent from 2.25 percent.