BEIJING, CHINA – OCTOBER 12: The People’s Bank of China (PBOC) building is pictured on October 12, 2020 in Beijing, China.
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China kept its benchmark lending rates unchanged for the fourth month in a row on Monday despite the U.S. Federal Reserve’s interest rate cut last week.
The People’s Bank of China kept the one-year loan prime rate (LPR) unchanged at 3.0% while the five-year LPR at 3.5%, respectively, according to a statement Monday. The one-year LPR influences most new and outstanding loans, while the five-year rate influences the pricing of mortgages.
The Monday decision came in line with economists’ expectations that Chinese authorities would hold off major stimulus measures amid a recent stock market rally, despite a string of economic data showing signs of fatigue in the economy.
The central bank last cut the key lending rates by 10 basis points in May as part of Beijing’s efforts to shore up its economy.
The PBOC last Thursday kept the seven-day reverse repo rate, which serves as the main policy rate, unchanged, following the Fed’s decision to reduce rates by a quarter percentage point.
The benchmark lending rates — normally charged to banks’ best clients — are calculated monthly based on designated commercial banks’ proposed rates submitted to the PBOC.
The country’s export growth slowed to 4.4% in August, marking their lowest growth rate since February, as the impact of frontloading shipments waned and the U.S. trade policy targeting transshipment weighed on exports to third countries.
Chinese policymakers are expected to roll out marginal monetary easing later this year to ensure the world’s second-largest economy hits the government’s annual growth target of around 5%.
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