Interest rates

The People's Bank of China lifted its 7-day and 28-day reverse repurchase agreements by 5 basis points.

This essentially represents a modest rise to borrowing costs and is the first rate hike since March.

Beijing is attempting to limit the flow of capital out of the country without harming economic growth.

In addition to short-term borrowing rates, China also increased rates on its one-year medium-term lending facility by 5 basis points.

China described the move as a "normal market reaction" to steps taken by the Federal Reserve.

The corporation came under scrutiny in parliament with accusations that it was charging high interest rates of 17% to its clients compared to commercial banks rates of 8% for home loans.
“The Public Accounts Committee has addressed this concern and rest assured when I say that the Housing Corporation is not imposing any unauthorized interest rates than those mandated by law,” reiterated Lautafi in Parliament.

“The rates mentioned are for unsecured loans and the Corporation is operating per her mandate to provide affordable loans for families wanting to build new homes.”

Ending a highly anticipated meeting, Fed officials said Thursday that while the U.S. job market is solid, global pressures may "restrain economic activity" and further drag down already low inflation.

Signs of a sharp slowdown in China have intensified fear among investors about the U.S. and global economy. And low oil prices and a high-priced dollar have kept inflation undesirably low.

The benchmark rate for a one-year loan will be cut by 0.25 percentage points to 4.6 percent and the one-year rate for deposits will fall by a similar margin to 1.75 percent, the central bank announced. It also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5 percentage points.

The moves had been expected after exports, manufacturing and other economic indicators weakened by larger margins than expected.