The central bank said on Friday that it will raise both the interest rates and the banks' required reserves.

The one-year lending rate will be increased by 0.18 percentage point while the one-year deposit rate by 0.27 percentage point, the People's Bank of China said on its website.

The move will take effect from Saturday.

It will take the one-year benchmark deposit rate to 3.06 percent, slightly higher than the consumer price index rise of 3 percent in April.

The one-year benchmark lending rate will rise to 6.57 percent from 6.39 percent.

The banks' reserve requirement ratio will be raised by 0.5 percentage point to 11.5 percent, which will become effective from June 5, the central bank said.

The previously low deposit rate has, at least, pushed up asset prices, as people are not willing to see their money lying in banks and being depreciated, said Liu Xiahui, economist with the Chinese Academy of Social Sciences.

The macroeconomic boom required an adjustment in the cost of money, analysts said.

In April, China's urban fixed asset investment increased by 25.5 percent year-on-year. During the same period, yuan lending increased by 16.5 percent, 0.2 percentage point higher than in March.

"The move is therefore not unexpected," said Song Guoqing, senior economist with Peking University's China Center for Economic Research.

The rise in the interest rate is "belated", said Xia Bin, director of the Financial Research Institute of the Development Research Center of the State Council. It will be able to curb the influx of speculative capital, or "hot money" by shortening the interest rate gap between the yuan and US dollar.

Analysts agreed the new measures will have some impact on the white-hot stock market, but the blow would be far from fatal.

Xia said they were aimed at macroeconomic regulation, not the equity market. "Both moves were mainly because of the excessive liquidity ... and they will be favorable to the healthy growth of the economy."

The central bank has now raised interest rates four times since last April and reserve requirements eight times since last June.