China | China raises short-term interest rates – again
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing. Photo: Reuters
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing. Photo: Reuters

China raises short-term interest rates – again

Rise is the third in an as many months and comes after warnings about tackling debt risks

March 16, 2017 11:31 AM (UTC+8)

China’s central bank raised short-term interest rates for the third time in as many months on Thursday, a day after the end of the annual session of parliament in which leaders warned that tackling debt risks would be a top policy priority this year.

The move came hours after the US Federal Reserve raised its benchmark policy rate, as had been widely expected.

The People’s Bank of China (PBOC) raised interest rates by 10 basis points on both medium-term lending facility (MLF) loans and its open market operation reverse repurchase agreements.

Some analysts had expected such a move in the coming months as authorities look to contain raises from a rapid debt build-up.

The move brought the rate on MLF loans to 3.05 percent for six month loans and 3.20 percent for one-year loans, the PBOC said in an online statement.

The PBOC also said it had lent 113.5 billion yuan (US$16.47 billion) of six-month MLF loans and 189.5 billion yuan of one-year MLF loans to 17 financial institutions on Thursday.

The MLF is a supplementary policy tool the central bank uses to manage conditions and medium-term interest rates in the banking system and money markets.

The central bank also raised the rates on open market operation reverse repos for seven-day, 14-day and 28-day tenors, bringing them to 2.45 percent, 2.60 percent and 2.75 percent, respectively.

China has cut its economic growth target this year as the world’s second-largest economy pledges to push through painful reforms to address a rapid build-up in debt, and erects a “firewall” against financial risks.

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