China central bank raises reverse repo rate after long holiday

BEIJING - China's central bank raised the bid interest rate of open-market operations through reverse repurchase agreements (repo) by 10 basis points on the first trading day of the Year of the Rooster.

The People's Bank of China (PBOC) said Friday that it conducted reverse repos worth 50 billion yuan (around $7.3 billion).

The seven-day reverse repos were priced to yield 2.35 percent, up from 2.25 percent in the previous operation.

The 14-day and 28-day rates have also been raised by 10 basis points, according to a PBOC statement.

The slight increase will drive up money market rates and improve the environment for containing asset bubbles and deleveraging, said Zeng Gang of the Chinese Academy of Social Sciences.

The PBOC last week increased the rates of medium-term lending facilities (MLF) by 10 basis points, the first rise since the liquidity tool was introduced in 2014.

China has added "neutral" to its monetary policy description for this year, as the government tries to maintain a stable growth while avoiding systemic risks.

China reported 6.7 percent GDP growth in 2016, lower than in recent years but within the target range.