$CNINTR - Interest Rates Cut
Updated
- The People’s Bank of China on Tuesday trimmed its one-year loan prime rate (LPR) by 10 basis points from 3.65% to 3.55%, and reduced the five-year rate by the same margin to 4.2%. The cuts follow reductions in other interest rates last week.
The LPR sets the interest that commercial banks charge their best clients, and serves as the benchmark for household and corporate lending. The one-year rate affects most new and outstanding loans, while the five-year rate influences the pricing of longer term loans, such as mortgages.
This is the first time the PBOC has cut both LPR rates since August 2022, when renewed Covid lockdowns and a deepening property downturn were pummeling the economy.
The LPR sets the interest that commercial banks charge their best clients, and serves as the benchmark for household and corporate lending. The one-year rate affects most new and outstanding loans, while the five-year rate influences the pricing of longer term loans, such as mortgages.
This is the first time the PBOC has cut both LPR rates since August 2022, when renewed Covid lockdowns and a deepening property downturn were pummeling the economy.
Note
Next CNITR scheduled on October 20/2023Note
CNINTR The People's Bank of China (PBoC) maintained lending rates at the November fixing, as widely expected.
The one-year loan prime rate (LPR), which is the medium-term lending facility used for corporate and household loans,
was left unchanged at a record low of 3.45%;
and the five-year rate, a reference for mortgages, was kept at 4.2% for the fifth straight month.
Decision came after the central bank last week held medium-term interbank rates steady as economic activity in October was mixed,
with headwinds from the property sector deepening despite a slew of stimulus measures from authorities.
Meantime, a weakening yuan continues to limit the scope of monetary easing. China remains an outlier among central banks, having loosened monetary policy to revive a faltering economy but further rate cuts would widen the yield gap with the US, risking yuan depreciation and capital outflows.
Some economists expect the board to slash the lending benchmark by 20bps at the end of Q1 of 2024.
source: People's Bank of China
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