Chinese banks kept their benchmark lending rates unchanged on Thursday, in line with the central bank’s move earlier this week as policymakers assess the economy’s recovery.
(Bloomberg) — Chinese banks kept their benchmark lending rates unchanged on Thursday, in line with the central bank’s move earlier this week as policymakers assess the economy’s recovery.
The one-year loan prime rate was held at 3.55%, in line with the forecasts from all 21 economists surveyed by Bloomberg. The five-year rate, a reference for mortgages, was also kept at 4.2%, as expected, data from the People’s Bank of China showed.
The loan rates are based on one of the PBOC’s key interest rates, which was kept unchanged this week following a cut in June. Central bank officials recently signaled it may offer more support to the slowing economy, hinting at a possible reduction in the reserve requirement ratio for banks and targeted property easing.
The economy’s recovery lost further momentum in the second quarter, while economy-wide prices declined for the first time since 2020. Loan expansion recovered in June, but questions remain on whether credit growth will pick up as business confidence remains low.
Economists expect the PBOC to take moderate steps to ease monetary policy in the rest of this year, including a potential cut to policy interest rates, lowering the RRR, and increasing the use of targeted tools to funnel credit into areas like small businesses.
The LPRs are based on the interest rates that 18 banks offer their best customers, and are published by the PBOC monthly. They are quoted as a spread over the central bank’s one-year policy rate, or the medium-term lending facility rate, which was kept unchanged this month following a 10-basis point cut in June.
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