BEIJING - The People's Bank of China (PBOC), or the central bank, on Thursday sold repurchase agreements worth 20 billion yuan ($3.16 billion), injecting 2 billion yuan of liquidity into the money market this week after hedging funds due in the open market.

The move, which ended a three-week net liquidity tightening in the market, left analysts speculating that policymakers are considering a monetary loosening by cutting the interest rate to spur a slowing economy.

"With the inflation level declining, I think policymakers will let the door of monetary easing open wider in the future, as domestic and external demands are still sluggish while the economy continues to slow," said Chen Ying, a fixed-income analyst with Sealand Securities.

Through its open market operations, the PBOC drained 44 billion yuan of liquidity from banks last month after it released about 420 billion yuan of liquidity into the banking system by lowering banks' reserve requirement ratio by 50 basis points on May 18.

Short-term borrowing costs between Chinese banks rose higher in the country's money market on Thursday, as suggested by interbank market yields.

The overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost of interbank borrowing as a key barometer of liquidity, rose 19.91 basis points to 2.4008 percent.

The one-week Shibor went up 10.83 basis points to 2.675 percent, while the two-week and one-month Shibors added 1.92 basis points and five basis points, respectively.

Mou Zhiyang, a fixed-income analyst for China Dragon Securities, said he was unsure if the PBOC will cut the interest rate over the weekend.

"It's difficult to speculate on the exact timing of a rate cut, " Mou said, "but I'm pretty certain that the central bank will resort to its price tools within this year."