The People's Bank of China said the interest rate hikes -- the fourth since late last year -- would take effect Wednesday.

The latest move takes the one-year deposit and lending rates to 3.25 percent and 6.31 percent respectively.

Authorities have been pulling on a variety of policy levers to rein in consumer prices and housing costs but inflation remains stubbornly high.

The country's consumer price index rose to 4.9 percent in February, well above the government's full-year target of four percent, despite persistent efforts to reduce household costs and ease growing consumer anxiety.

The central bank has also raised the amount of money banks must keep in reserve several times this year in a bid to restrict bank lending, which has been driving up property prices and angering first-home buyers struggling to get a foot in the red-hot real estate market.

Premier Wen Jiabao told the country's legislature last month that reining in prices was the government's "top priority" in 2011, as China strives for a more balanced eight percent growth rate.

Analysts said the timing of the latest interest rate hike was surprising and could mean the consumer price index in March was stronger than the government had anticipated.

"This rate hike suggests that the March CPI that is to be released early next week may have surprised to the upside," said Morgan Stanley economist Wang Qing, who expects another rate hike in May or June.

"It also suggests that Chinese authorities are confident in the sustainability of underlying growth momentum."

But London-based Capital Economics analyst Mark Williams played down the chances of another rate hike, with "incoming data suggesting that the economy has started to slow and that inflation is levelling out."

Williams said he believed "several more reserve requirement increases" were in the pipeline.

The moves to raise rates come as the leadership in Beijing also fends off calls for it to let the yuan currency trade more freely amid accusations it it being kept artificially high to boost its own exports.

Critics of China's exchange rate policy argue that a stronger currency would help Beijing curb inflation by reducing the cost of imports.

China's stock market was closed Tuesday for a public holiday.

Analysts said previously the series of hikes in interest rates and the reserve requirement ratio appeared to be working -- though more would be required to keep lending under control.

The value of new loans issued by Chinese banks in February fell to 535.6 billion yuan ($81.5 billion), down from 1.04 trillion yuan in January, the central bank said last month.

The cost of a newly built home in eight of the 70 major cities tracked also fell in February from January, the National Bureau of Statistics said last month. Just three cities had shown a decline in January.

Key data for March and the first quarter will be released next week.

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