Why indices ignored rise in interest rates

Don't read too much into the latest increase in bank interest rates. The stock market doesn't, as indicated by the stable performance of the leading indices. What the central bank has done in raising interest rates and lowering the tax on interest income was basically a "passive" reaction to bring the interest rate structure in line with the inflation rate.

As correctly interpreted by various investment markets, the seemingly high consumer price index in June does not indicate an overheated economy.

The consistent rise of CPI since the beginning of the year has been driven by increasing food prices, while the core inflation, excluding food and fuel, has remained at a low level of around 1 percent in the past two months.