Beijing, Nov 21 (IANS): China's central bank said Friday that it would inject liquidity into the country's banking system if necessary.

"At present, the overall liquidity in the banking system is abundant," the People's Bank of China (PBOC), the central bank, said in a posting on its official microblog on Sina Weibo.

Recently, there have been fluctuations in short-term capital supply and demand and money market interest rates, according to the PBOC, citing factors including the initial public offerings of several companies next week.

"If necessary, the central bank will provide timely liquidity support via multiple monetary policy tools," Xinhua quoted the central bank as saying.

The statement was made in response to a report about a squeeze in the interbank market on Thursday.

The overnight rate of Shanghai Interbank Offered Rate (Shibor), a key barometer of interbank lending cost in China, rose 3.5 basis points to 2.539 percent Thursday and further to 2.586 percent Friday, the highest since early October.

The central bank's remarks are a clear signal for stabilising market expectation and a showcase of its monetary policies being forward-looking, Lian Ping, chief economist with the Bank of Communications, told Xinhua.