China's central bank raised interest rates on a key funding tool, the medium-term lending facility (MLF), on Tuesday in its latest bid to cut debt levels and bolster financial stability.
Policymakers are trying to keep the world's second-largest economy sufficiently greased to counter an economic slowdown while also managing risks created by an explosive growth in debt that has fueled a housing boom.
China's benchmark bond futures prices fell at the end of the trading day on the higher rates, as the People's Bank of China (PBOC) also rolled over maturing MLF loans.
The central bank raised the interest rate for one-year and six-month MLFs by 10 basis points each to 3.1 percent and 2.95 percent, respectively.
The move was designed "to maintain basic stability in the banking system", the PBOC said in a statement.
Analysts suspected this increase in the cost of one of the main money market funding avenues for banks was in line with the central bank's broader objective of reining in speculative investment in the economy.