China has just raised its short-term interest rates

Pan Gongsheng, Deputy Governor of People’s Bank of China. ( Wang Zhao/Getty Images)

The People’s Bank of China (PBOC) has made a slight upward change to inter-bank lending rates.

China’s seven-day reverse repo rate was bumped up to 2.55%, from 2.5%.

Reverse repos are used by central banks to drain liquidity from a nation’s financial system.

The move was expected by markets, as Chinese policy makers often makes small adjustments in response to interest rate announcements by the US Federal Reserve.

The PBOC said the rate adjustment will help the market to shape reasonable interest rate expectations, Reuters reported.

China’s central bank added that the rate increase was done in accordance with the market’s expectations, and is a normal response to the Fed’s rate hike.

Stocks in mainland China were little-changed in the wake of the announcement, with the benchmark Shanghai composite index a short time ago down by around 0.2%.