Provincial governors of China's central bank have given it high marks for its use of various tools in the first half of the year to rein in the world's fastest-growing major economy.

The People's Bank of China (PBOC) had flexibly applied the combined monetary policy tools to strengthen the management of liquidity, including raising interest rates and bank reserve requirements, and widening the trading band of the yuan, it said on its Web site.

The financial macro control measures have achieved remarkable success, the PBOC said.

The PBOC raised interest rates again on Friday in the latest of a series of moves aimed at keeping inflation in check and preventing the world's fourth-largest economy from overheating.

It also slashed withholding tax on interest income on deposits to 5 percent from 20 percent, seeking to offset the impact of inflation on real deposit rates and give savers less of an incentive to bet on the red-hot stock market.

The moves came a day after China reported that annual economic growth accelerated to 11.9 percent in the second quarter.

The PBOC ordered an increase of 0.27 percentage point in commercial banks' benchmark one-year deposit and lending rates to 3.33 percent and 6.84 percent respectively, taking effect on Saturday.

The central bank has now raised interest rates five times since April 27, 2006. It has also raised banks' reserve requirements eight times since June 2006.

The financial market developed healthily and steadily in the first half of the year, the PBOC said. ... The work on financial system reform and financial stability made new progress.

The PBOC said it had prompted three of its Big Four lenders to deepen internal reforms.

China has spent billions of dollars on its big banks to clean up the legacy of decades of inefficient state-directed lending.

It has purged bad loans from the balance sheets of three of the Big Four state-owned banks, pumped in new capital, brought in strategic foreign investors and introduced independent directors.

China Inflation