China will reduce the bank deposit interest income tax and raise interest rates, the Financial Times reported. The State Council, announced it would cut bank deposit interest income tax from 20% to 5% from August 15, while the People's Bank of China, the country's central bank, said it raised the benchmark one-year deposit and lending rates by 27 basis points starting July 21. This is the central bank's fifth rate hike since last April. The announcements came after the government released its second-quarter economic report, which showed gross domestic product grew at the unexpectedly high rate of 11.9%. Inflation was also high at 4.4% in June. The latest measures are designed to discourage further stock market investment and "stabilize inflation expectations".