China’s decision to free its currency from a decade-long peg to the US dollar drew praise yesterday from European officials who hoped the change might benefit their economies, which have been battered by cheap Chinese imports.

As the disbelief, then the despair sank in, and dejected supporters of the Paris Olympic bid trudged quietly home in the rain, economists in France began counting the cost of London’s victory.

BOND investors, who little more than a month ago were predicting lower interest rates amid a growing risk of deflation to the global economy, now say the next move by the Federal Reserve, the European Central Bank and the Bank of England will be to increase interest rates.

Researchers have found economists believe interest rates in Europe will remain unchanged next week but there will be a cut in rates before June.