Plus   Neg

China Retains Benchmark Lending Rates

china flag 041317 20jan21 lt

China's benchmark lending rates were left unchanged as widely expected, on Wednesday.

The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent.

The one-year and five-year loan prime rates were last lowered in April 2020. The one-year loan prime rate was cut by 20 basis points and five-year rate by 10 basis points in April.

Markets have expected the rates to remain on hold today as the People's Bank of China had kept the rate on its medium-term lending facility unchanged early this month.

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.

The PBoC is shifting its focus away from supporting growth back towards containing financial risks, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.

With monetary conditions already being tightened in practice and underlying inflation set to rebound, it is still likely that the PBoC will opt to formally hike rates later this year, they added.

Elsewhere, the Ministry of Commerce reportedly said that foreign direct investment into China grew 4.5 percent in 2020.

For comments and feedback contact: editorial@rttnews.com

Forex News

Follow RTT