The interest rate hike by the central bank was well within market expectations. Analysts say the move is aimed at taming stubbornly high inflation, which is at a staggering 5.5 percent for the month of May.

China's Consumer Price Index, a main gauge of inflation, rose to a 34-month high of 5.5 percent in May. The market forecasts CPI in June will jump by over six percent, hitting a new high for this year.

Experts believe the country is still facing unrelenting inflationary pressures, and the latest rate hike - the third this year - makes it clear that the fight against inflation is a top priority.

Yin Zhongli, Researcher, Institute of Finance and Banking, Cass, said, "The central bank raised the required reserve ratio last month and hiked interest rates yesterday. The moves are in line with market forecasts, and the financial market in particular has been prepared for the adjustment."

Many institutions expected the rate hike a month ago. But the central bank didn't take action until Tuesday.

The rate hike brings risks, like the slowing of macro-economic growth and hot money inflows. But with price pressures remaining high in China, it seemed the only choice for the country's central bank.

Experts say the adjustment will impact market expectations, and supplementary measures are needed to battle inflation.

Tan Yaling, Director, China Forex Investent Research Institute, said, "Supplementary measures are necessary. The use of different tools and policies is very significant to winning the battle against inflation."

As for whether there will be more tightening measures coming up in the rest of the year, experts hold varying opinions. Some say if inflation comes down, there will be no need to further raise rates.