BEIJING — China’s central bank on Feb 3 raised the interest rates on standing lending facilities (SLF), a liquidity support tool.
The interest rate of overnight SLF loans was increased to 3.1 percent from 2.75 percent, while those of seven-day and one-month SLF loans were upped to 3.35 percent and 3.7 percent from 3.25 percent and 3.6 percent, respectively.
SLF is a tool created by the People’s Bank of China (PBOC) in early 2013 to provide a large amount of funding to banks when they face a liquidity squeeze and are unable to get sufficient financing from the interbank market.
Also on Feb 3, the PBOC increased the bid interest rates for reverse repurchase agreements.
The latest rate hikes followed the PBOC’s move last week to raise the interest rates on medium-term lending facilities by 10 basis points, the first raise since the tool was introduced in 2014.
In January, the PBOC granted 87.7 billion yuan ($13 billion) of SLF loans to financial institutions.