China's central bank increased interest rates for the third time this year on Wednesday, making clear that taming inflation is a top priority even when as the economy slows gently.

Benchmark one year lending rates will be raised 25 basis points to 6.56%, and benchmark one year deposit rates will be raised 25 basis points to 3.5%.

The increases will take effect from Thursday.

Abundant liquidity and elevated commodity prices drove China's inflation to a 34-month high of 5.5 percent in May, unsettling Beijing which worries rising prices may stir social unrest.

(Sourced from Reuters)