The People’s Bank of China (PBOC) building in Beijing on December 15, 2022.
Bloomberg | Getty Images
China’s central bank on Wednesday Maintained key benchmark lending rates Unchanged, as Beijing assesses the impact of its recent stimulus measures.
The People’s Bank of China said it would keep the 1-year loan prime rate at 3.1 percent and the 5-year LPR at 3.6 percent.
Market watchers Polling by Reuters was expected. The PBOC will keep lending rates unchanged this month.
“There was no immediate need to adjust the LPR this month,” said Bruce Peng, JLL’s chief economist and head of Greater China research, adding that Chinese leaders were likely still reeling from the impact of recent measures. are reviewing which aim to boost the economy.
Record low net interest margins at Chinese commercial banks have limited their ability to support low lending rates, Peng said, “while another policy rate cut seems unlikely before the end of the year.” , but interest rate cuts remain likely in 2025.”
The 1-year LPR affects corporate and most household loans in China, while the 5-year LPR serves as a benchmark for mortgage rates.
The rate decision came after a 25 basis point cut in 1-year and 5-year LPRs last month, and followed China’s October economic data that showed weak momentum in the economy despite a recent barrage of stimulus announcements. highlighted
In October, China reported slower-than-expected industrial production and fixed-asset investment growth. The annual decline in real estate investment from January to October also accelerated from a year ago.
Only retail sales beat expectations, with a 4.8% year-on-year increase, indicating that the recent stimulus is starting to spread to some sectors of the economy.
Since late September, Chinese authorities have stepped up stimulus announcements to boost economic growth, which has been dragged down by a prolonged property crisis as well as weak consumer and business sentiment.
Earlier this month, the Finance Ministry unveiled a 5-year fiscal package totaling 10 trillion yuan ($1.4 trillion) to tackle local governments’ debt problems, while signaling more economic support to come next year.
China’s central bank also planned to maintain accommodative monetary policy, said Governor Peng Gongsheng, who indicated in October that there was room for several key policy rate cuts by the end of the year.
Morgan Stanley expects China’s growth to hover around 4 percent over the next two years, and downgraded Chinese equities to “slightly underweight” in a note on Sunday, citing an inflationary environment and rising Trade tensions are called threats.
“We see little chance that the Chinese government will front-load enough fiscal stimulus to target consumption and housing,” the analysts said.
Goldman Sachs also estimated that China’s GDP growth could fall to 4.5 percent in 2025, from 4.9 percent this year, according to the bank’s note on Monday.
However, Goldman maintained an “overweight” stance on China equities, forecasting a 13 percent gain in the benchmark CSI 300 index next year.
Donald Trump’s election victory, which is likely to bring higher tariffs on Chinese exports, has added to uncertainty over China’s export-heavy economy.
