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Chinese central bank raises short-term interest rates

The People's Bank of China raised short-term interest rates in a move that further indicates the Chinese authorities' intention to contain capital outflows and mitigate risks to the financial system, Reuters reported Feb. 3.

The central bank raised the interest rate on open market operations reverse repurchase agreements by 10 basis points, effective Feb. 3. The central bank also raised the lending rates on its standing lending facility for short-term loans.

Analysts believe the tightening of money market rates indicate that the central bank wanted to retain policy flexibility while keeping the economy from slowing again. Naoto Saito, chief economic researcher at the Daiwa Institute of Research, said the central bank may be intent on controlling a real estate bubble and arresting the yuan's depreciation.

In January, the central bank raised the medium-term lending facility rates to curb growth in debt levels.