February 3, 2017 / 2:15 AM / a year ago

China raises interest rates for open market operation reverse repos

SHANGHAI, Feb 3 (Reuters) - China’s central bank surprised financial markets on Friday by increasing the interest rates on open market operations by 10 basis points, on the first day back from the long Lunar New Year holidays.

The seven-day open market operations rate was raised to 2.35 percent from 2.25 percent, the rate for 14-day tenor to 2.50 percent from 2.40 percent, and the rate for 28-day tenor to 2.65 percent compared with the previous 2.55 percent, the People’s Bank of China said in a statement on Friday.

On the same day, the central bank drained a net 70 billion yuan ($10.19 billion) through open market operations.

The move is likely to reinforce views that China’s central bank is slowly moving to a tightening policy bias, but analysts expect benchmark interest rates to remain unchanged and say any further steps are likely to be gradual. ($1 = 6.8721 Chinese yuan renminbi) (Reporting by Shanghai Newsroom; Editing by Kim Coghill)

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