The facts on Thursday were pretty clear.
Hours after the US Federal Reserve's decision to raise interest rates, China's interest rates for medium-term lending facility (MLF) loans and reverse repos, both open market operation tools of the central bank, went up by 10 basis points, Xinhua news agency reported.
China's central bank raised short-term interest rates Thursday following the US rate increase as Beijing tries to shore up the value of its currency and stanch an outflow of money.
The PBoC said that the increase did not signal a change in monetary policy, noting that flexibility in rates was favourable for deleveraging and risk prevention.
The criteria for whether China is raising interest rates are the benchmark loan and deposit rates, the central bank said. Thursday morning, the metal was up $46 at $5,911 and trading in the range of $5,889-$5,948.
China's central bank has responded to the Federal Reserve's move overnight by raising interbank interest rates in a bid to avoid downward pressure on the yuan from investors chasing higher returns and shifting their money to the US.
By contrast, money market rates offer a more frequent and consistent measure to judge China's monetary policy stance.
Going forward, the Chinese central bank may tighten monetary policy, and Mizuho anticipates two or three rate hikes under the new monetary policy framework in 2017.
Ficci said the monetary policy stance of the RBI is likely to be determined by a host of factors, the Fed rate hike being one of them.
While China is putting on a courageous face about capital outflows and the depletion of its foreign exchange reserves, it is quietly strengthening controls over outbound remittance and investments. So, why is China's central bank denying any interest rate increases when the money market rates are moving upwards?
So when the Federal Reserve is raising interest rates, China's central bank can not afford to sit idle because that may bring additional risks of capital outflow.
Economists have warned the yuan would face further downward pressure if higher US interest rates caused money to flow out of China in search of higher returns.