The People's Bank of China (PBOC), the central bank, slowed its efforts to inject capital into banks through open market operations this week due to ample liquidity in the interbank market.

The central bank allowed a net 221 billion yuan (35.08 billion U.S. dollars) to drain from money markets this week, the largest drain in eight months, as previously issued reverse repos matured.

The liquidity tightening came after the central bank used repos to buy30 billion yuan in securities from banks with terms of seven and 14 days earlier this week.

The yield for seven-day reverse repos stood at 3.35 percent, while that for 14-day reverse repos remained unchanged at 3.45 percent.

China's liquidity has improved since banks increased their pace of lending last month, prompting the central bank to halt liquidity injections this week.

The country's banks extended 623.2 billion yuan in loans in September, up 153.9 billion yuan from a year earlier, bringing the nation's total new yuan loans in the first three quarters to 6.72 trillion yuan, up 1.04 trillion yuan year on year.

However, Zhang Zhiwei, chief China economist at Nomura, said the central bank may cut benchmark interest rates this month to replenish liquidity, as a record 405 billion yuan in reverse repos will mature next week. Endi