More financial tightening

The latest interest rate hike that China's central bank announced on Wednesday should come as no surprise as the country's consumer inflation is widely expected to have accelerated significantly in June.

Though tentative signs of a slowdown have recently given rise to fears that more monetary tightening could hurt growth too much, Chinese policymakers still cannot afford a pause in their struggle to curb inflation, which is proving more stubborn than predicted.

On Thursday, the People's Bank of China raised its benchmark deposit and lending rates by 25 basis points. Given that it is likely that inflation will exceed 6 percent in June, the latest move can hardly be deemed a pre-emptive strike before another big jump in inflation is reported next week.