Surprise rate hike announced

Move aims to 'head off inflation, absorb liquidity'

BEIJING - The central bank on Tuesday raised interest rates for the first time in nearly three years in an attempt to combat inflation and soak up excessive market liquidity.

The People's Bank of China said it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent, effective on Wednesday.