China's benchmark short-term money market rate spiked up more than 40 basis points on Friday after the People's Bank of China announced a rise in bank reserve requirement ratios (RRR) after the market closed on Thursday. The weighted average seven-day government bond repurchase rate, the main barometer of short-term liquidity supply, rose to 3.2012 percent by 0136 GMT, up from 2.7563 percent at the close on Thursday.
The central bank raised the RRR by 50 basis points, effective Thursday next week, signalling that containing inflation and soaking up excess cash remained its top priority even after signs the economy was slowing down. The announcement came as a surprise to some analysts who had expected the People's Bank of China to apply monetary brakes more gently after a host of April data, including industrial output and imports, came in weaker than expected.
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