The market is widely expecting the People's Bank of China to inject more money via reverse repurchase agreements after the central bank already injected about 270 billion yuan ($43 billion) so far this week, traders said. Trading hours were extended slightly in the interbank market late on Tuesday to allow banks to conduct mor lending and borrowing, and traders said another move by the PBOC to alleviate a shortfall in funds could come as early as Wednesday. Some questioned the wisdom of the central bank for not cutting banks' reserve requirement ratios (RRR) -- a move that could inject 400 billion yuan into the market and widely expected by the market since mid-December. "A shortfall of money keeps banks from lending and pushes borrowing costs very high," said a dealer at a Chinese commercial bank in Shenzhen. "The situation is even worse than the market had expected. Everyone is looking for another PBOC rescue." The benchmark weighted-average seven-day bond repurchase rate rose 25 basis points to a six-month high of 7.3957 percent by midday from 7.1468 percent at Tuesday's close. The shortest overnight one-day repo rate jumped to 8.2539 percent from 7.5214 percent and the 14-day repo rate advanced to 8.8758 percent from 7.3883 percent. IRS INVERTED Despite the acute shortage of funds, traders expected the liquidity squeeze to be over shortly after the holiday. The central bank announced earlier this month that it would suspend bill sales and could conduct reverse repo business to meet a cash shortage in the money market ahead of the Lunar New Year. The move was apparently aimed at avoiding cutting RRR before the holiday so as to prevent the market from being too optimistic over the government's monetary policy easing. But as China's economy slows, and the government shifts more focus to growth, the PBOC is still expected to cut RRR in the near term, possibly with an announcement before the holiday, which could take effect after the break, traders said. China's economy grew at its weakest pace in 2-1/2 years in the latest quarter and it appeared headed for an even sharper slowdown in the coming months as export demand fades and the housing market falters, data issue on Tuesday showed. The money market crunch has also spread to China's interest rate swaps, with the IRS curve having remained slightly inverted since early January thanks to a jump in one-year IRS. One-year IRS were quoted at 3.07 percent at midday on Wednesday, higher than 3.01 percent for benchmark five-year IRS, which rose slightly from Tuesday's close of 2.99 percent.