China’s central bank added fuel to fears on Thursday it was clamping down on inflation risks as it allowed cash to drain from the financial system for a second straight week, sparking a jump in short-term rates.
The move by the People’s Bank of China (PBOC) happened as Beijing stepped up its efforts to counter surging property prices in the capital in an attempt to calm rising discontent over the city’s record-high home prices.
China also widened the funding options for local governments and property companies by giving them access to the interbank bond market to finance affordable housing, a priority of Chinese leaders, sources told IFR, a Thomson Reuters publication.
Housing data this week has raised fresh concerns about property bubbles in some major cities, which could add to consumer inflation – already at a seven-month high – and add to criticism that home prices are increasingly out of reach of ordinary Chinese.
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