China Holds Benchmark Lending Rates Steady
(RTTNews) - The People's Bank of China kept its benchmark lending rates unchanged on Wednesday after recent economic data suggested that the series of easing measures eventually started to provide positive impetus to the economy.
After a 10 basis-point reduction in August, the one-year loan prime rate, or LPR, was kept unchanged at 3.45 percent.
The five-year LPR, the benchmark for mortgage rates, was retained at 4.20 percent. The rate was last reduced by 10 basis points in June.
The Chinese central bank fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.
The status quo on the LPR was widely anticipated by markets after the rate on medium-term lending facility, which acts as a guide to loan prime rates, was left unchanged at 2.50 percent last week. The bank added CNY 591 billion liquidity into the market via MLF.
Last week, the central bank had reduced the reserve requirement ratio for the second time this year. The cut in weighted average RRR for banks about 7.4 percent would release around CNY 500 billion into the system.
Capital Economics' economists said the beefed up policy support should underpin a further economic recovery over the coming months.
Economists expect some additional monetary easing, further support to the housing market and measures to keep the fiscal stance supportive over the rest of the year.
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