U.S. Dollar and China Yuan notes are seen in this picture illustration June 2, 2017. (REUTERS/Thomas White/Illustration/File Photo)
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China gingerly raised a key short-term interest rate on Thursday following the U.S. Federal Reserve Bank's move overnight, in a symbolic reminder that Beijing is keeping an eye on global market trends even as it cracks down on financial risks at home.The People's Bank of China (PBOC) said it had increased by 5 basis points (bps) the rate on 7-day reverse repurchase agreements, or reverse repos, one of its most commonly used tools to control liquidity in the financial system.The Fed raised U.S. interest rates by 25 bps, or a quarter of a percentage point, on Wednesday and forecast at least two more hikes for 2018 .The new rate on the 7-day reverse repo was raised to 2.55 percent, while the PBOC injected 10 billion yuan ($1.58 billion) into the financial system.The PBOC had similarly inched up some rates after the Fed hiked its policy rate last March and December.Nie Wen, an economist at Hwabao Trust in Shanghai, expected the PBOC to raise market rates by a total of 25 bps this year, or as much as 50 bps if consumer inflation in China rises above 3 percent.
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