BEIJING — China’s central bank said on March 16 that higher interest rates for open market operations, which were market-based, were not interest rate hikes.
The central bank remarks came after interest rates for medium-term lending facility (MLF) loans and reverse repos, both open market operation tools of the central bank, each rose by 10 basis points.
The move came hours after the US Federal Reserve raised its benchmark policy rate, as had been widely expected by the market.
Interest rates of the six-month MLF and one-year MLF rose to 3.05 percent and 3.2 percent, respectively, according to a statement by the People’s Bank of China (PBOC).
PBOC said it had lent 113.5 billion yuan ($16.45 billion) in six-month MLF and 189.5 billion yuan in one-year MLF to 17 financial institutions on March 16.
The seven-day, 14-day and 28-day reverse repos all saw a 10-basis-point increase in their interest rates, which stood at 2.45 percent, 2.6 percent and 2.75 percent respectively, according to the statement.
The higher rates were results of changes in market demand and supply and did not indicate a shift in China’s monetary policy stance, the central bank said.
China has vowed to pursue a prudent and neutral monetary policy in 2017.