Chinese interest rates to be "liberalised" further, keep yuan basically stable

China's central bank indicated it had plans to liberalise interest rates further on Friday, as Beijing officials worked to calm markets after a week of painful volatility.

The People's Bank of China also said it would work to keep the yuan basically stable, make it "more international", improve the mechanisms behind the currency and "deepen" the reforms it was making to the foreign exchange system.

At present, the onshore yuan is pegged to the US dollar and reviewed daily, and is permitted to trade at 2% either side of the peg. The band was widened from 0.5% in 2012.

The statement from the central bank pledged supplementary loans and credit policies to support key areas of the economy, as well as promising to maintain "prudent" monetary policy and the flexible use of its tools to maintain liquidity in China's banking system.