Mumbai: China raised its benchmark interest rates for a fifth straight time since April last year amidst a series of other tightening measures aimed at keeping inflation in check and cooling the world''s fastest-growing major economy.

The People''s Bank of China directed commercial banks to increase base one-year deposit and lending rates by 0.27 percentage points.

The one-year benchmark deposit rate will move up to 3.33 per cent from 3.06 per cent while the one-year lending rate will rise to 6.84 per cent from 6.57 per cent.

The increase came a day after the government reported that annual growth accelerated to 11.9 per cent in the second quarter, the fastest rate in 11-½ years, from 11.1 per cent in the first quarter.

It is the fifth time that the central bank raised interest rates since April 27, 2006. The People''s Bank has also raised banks'' reserve requirements eight times since June 2006.

"This interest rate adjustment will help to guide reasonable growth of credit and investment, adjust and stabilize expectations about inflation and maintain basic stability of general price levels," the central bank said on its web site.

The central bank also raised the interest rate on sight deposits to 0.81 per cent from 0.72 per cent, the first time it has adjusted that rate since February 2002.

On May 18, the central bank raised the benchmark lending rate by 0.18 percentage point and the deposit rate by 0.27 percentage point — at the same time increasing banks'' required reserves and widening the yuan''s daily trading band against the dollar.

The changes take effect from July21, the People''s Bank of China said on its website.

The rate hikes follows a Chinese cabinet statement that the government plans to cut tax paid on interest income to 5 per cent from 20 per cent beginning August 15.

The reduction is aimed at encouraging Chinese investors to keep their money in banks rather than pumping it into the country''s booming stock market.

Beijing, last week, also raised its 2006 GDP growth estimates from 10.7 per cent to 11.1 per cent, bringing China closer to overtaking Germany as the world''s third-biggest economy behind the United States and Japan.