China economy news: PBOC raises short-term interest rates in fresh tightening signal

by Dramelin 10:00 PM 0 comments

Higher interest rates could prod debt-laden firms into deleveraging, though at the risk of stunting growth. China`s central bank surprised financial markets on Friday by raising short-term interest rates on the first day back from a long holiday, in a further sign of a tightening policy bias as the economy shows signs of steadying. "The People`s Bank of China (PBOC) raised the interest rate on open market operation reverse repurchase agreements (repos) by 10 basis points, effective on Feb. 3. "All in all, it comes across as a move to tweak interest rate levels to accompany a broader monetary policy shift. Analysts said the tightening of primarily money market rates suggested the PBOC wanted to retain policy flexibility as it balances the need to keep the economy from slowing again.