Chinese banks hold lending rates steady after big cut last month
CHINESE banks held their benchmark lending rates following a major cut last month.
The one-year loan prime rate will stay at 3.10 per cent and the five-year rate remains at 3.60 per cent, according to a statement from the People’s Bank of China on Wednesday (Nov 20). The moves were in line with the forecasts of economists surveyed by Bloomberg.
The world’s second-largest economy is seeing early signs of stabilisation after Beijing unleashed its boldest stimulus measures since the pandemic. That is a welcome sign for the nation just before the return of President-elect Donald Trump, who has threatened to ramp up tariffs on Chinese shipments.
Last month, the People’s Bank of China kept its one-year policy rate unchanged after slashing funding costs by the most on record. That move had suggested authorities were cautiously pacing monetary stimulus to support the economy.
Also in October, Chinese banks cut their loan prime rate (LPR) following the PBOC outlining steps to encourage households and companies to borrow money.
Policymakers have also delivered interest-rate cuts and support for the property and stock markets, while also rolling out a US$1.4 trillion debt swap programme to curb risks faced by local authorities and free up fiscal room for them to promote growth.
The central bank is likely to roll out more policy easing steps such as reserve requirement ratio cut in the coming months. Last month, PBOC governor Pan Gongsheng reiterated the central bank may lower the RRR – which frees up cash for banks to lend – by another 25 to 50 basis points by the end of the year, depending on market liquidity conditions. BLOOMBERG
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