China's central bank has raised benchmark one-year interest rates by 25 basis points, effective on Wednesday. The move has taken both analysts and the markets by surprise.

The People's Bank of China raised the one-year lending and deposit rates by 25 basis points.

It's the first time the central bank has raised rates since December 2007.

The PBOC said in a statement it will raise the one-year yuan lending rate to 5.56 percent, and one-year yuan deposit rate to 2.5 percent. But the interest rate for current deposits remains unchanged.

Some experts say the latest move reflects China's concern about rising domestic asset prices, and inflationary pressures.

The recent rise in headline inflation has put the real rate into negative territory. And although it was an unexpected move, a number of economists say it will help to keep savers' returns in positive territory.

The central bank slashed benchmark lending rates several times between September and December 2008, to combat the global financial crisis.