Plus   Neg

China Maintains Benchmark Lending Rates

peoplesbankofchina 020317 19mar20 lt

China left its benchmark lending rates unchanged on Friday, defying expectations for a reduction as economic activity faces severe downturn after the outbreak of coronavirus, or covid-19.

The one-year loan prime rate was retained at 4.05 percent and the five-year loan prime rate at 4.75 percent. The one-year LPR was last reduced in February, by 10 basis points.

Although rates were kept unchanged, monetary conditions are still easing as the People's Bank of China has been using a broad set of instruments to ensure that credit keeps flowing despite disruptions to activity, Julian Evans-Pritchard, an economist at Capital Economics said.

The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced the central bank's traditional benchmark lending rate in August 2019.

Although official data showed sharp contractions in industrial production, retail sales and fixed asset investment during January to February period, the central bank refrained from cutting the medium term lending rate on Monday.

The central bank had injected $14.3 billion into the financial system this week via medium-term lending facility with the rate unchanged at 3.15 percent.

Nonetheless, the bank reduced the reserve requirement ratio for qualified banks with effect from March 16, releasing CNY 550 billion into the financial system.

For comments and feedback contact: editorial@rttnews.com

Economic News

What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.

Follow RTT