China's central bank raised interest rates by 25 basis points. The PBOC waited until the final day of the Lunar New Year holiday to announce the move, which had been expected for weeks.

China's central bank has announced it's raising the benchmark deposit and lending rates by 25 basis points effective Wednesday. That means the one-year yuan deposit rate will be raised to 3 percent from 2.75 percent.

The timing was a surprise, coming on the final day of China's lunar New Year holiday. But investors have long expected more monetary tightening, as China struggles to rein in price pressures and ward off a property bubble.

Some analysts say the step indicates inflation in January, expected to be released later this week, accelerated back above 5 percent.

Anti-inflation talk from China's central bank in recent months has primed investors for more policy tightening. And even with the latest move, many believe further tightening is on the cards.

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