China Swap Rate Rises After PBOC Says Funding Costs to Stay High
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China’s one-year interest-rate swaps climbed after the central bank signaled it intended keeping funding costs relatively high to curb debt growth.
The market needs to live with reasonable rate changes so it can be effective in allocating resources and modifying the behavior of participants, according to the People’s Bank of China’s fourth-quarter monetary policy report released Feb. 8. The central bank said massive borrowing and construction led by local governments in recent years had increased risks in the Chinese economy.