BEIJING (Reuters) - China’s central bank raised short-term interest rates on Thursday in what economists said was a bid to stave off capital outflows and keep the yuan currency stable after the Federal Reserve raised U.S. rates overnight.
The increase in short-term rates was China’s third in as many months, and came a day after the end of the annual session of parliament where leaders warned that tackling risks from a rapid build-up in debt would be a top policy priority this year.
The People’s Bank of China (PBOC) has moved to a tightening bias this year following six benchmark interest rate cuts in 2014-2015 as the economy stabilizes and the focus turns toward credit risk.
The slight tightening has targeted money market rates, with traditional benchmark policy rates left unchanged as the central bank tries to avoid raising funding costs for an already heavily-indebted corporate sector.
The benchmark one-year lending rate was last cut on October 24, 2015, a Saturday, and stands at 4.35 percent.
Here is a timeline of the recent rate hikes:
Medium-term lending facility (MLF), 10 basis point (bps):
- Six-month MLF rate raised to 2.95 percent
- One-year MLF rate raised to 3.1 percent
Open market operation reverse repurchase agreements (repos), 10 bps:
- Seven-day reverse repo rate raised to 2.35 percent
- 14-day reverse repo rate raised to 2.50 percent
- 28-day reverse repo rate raised to 2.65 percent
Standing lending facility (SLF), various bps:
- Overnight SLF rate raised 35 bps to 3.10 percent
- Seven-day SLF rate raised 10 bps to 3.35 percent
- One-month SLF rate raised 10 bps to 3.70 percent
Open market operation reverse repos, 10 bps:
- Seven-day reverse repo rate raised to 2.45 percent
- 14-day reverse repo rate raised to 2.60 percent
- 28-day reverse repo rate raised to 2.75 percent
MLFs, 10 bps:
- Six-month MLF rate raised to 3.05 percent
- One-year MLF rate raised to 3.2 percent
SLFs*, various bps:
- Overnight SLF rate raised 20 bps to 3.30 percent
- Seven-day SLF rate raised 10 bps to 3.45 percent
- One-month SLF rate raised 10 bps to 3.80 percent
* Information on SLF rate change on Thursday is based on Reuters’ sources. PBOC did not immediately confirm the SLF rate hike or provide a comment.
(Story corrects to fix date of last policy rate cut in paragraph five.)
Compiled by Elias Glenn in BEIJING and John Ruwitch in SHANGHAI