BEIJING: Chinese banks have held their benchmark lending rates for a fifth straight month amid a lack of monetary easing, as officials keep room open for stimulus in case US tariffs rise again.
The one-year loan prime rate (LPR) was maintained at 3.1%, according to a statement from the People’s Bank of China yesterday.
The five-year LPR was also unchanged at 3.6%. The market consensus was for both rates to stay unchanged.
China needs to mobilise funding support to prop up its ailing housing market and spur spending by businesses and households to break a deflation cycle.
The world’s second-largest economy has been suffering from weak borrowing demand while price growth remains stubbornly subdued.
Premier Li Qiang has pledged “timely” interest-rate cuts and long-term liquidity injections into the banking system this year, with monetary and fiscal stimulus expected in the coming months to offset the fallout from higher US tariffs.
Bloomberg economist David Qu said: “China’s steady loan prime rates yesterday show commercial banks are reluctant to reduce borrowing costs for businesses and consumers until the People’s Bank of China (PBoC) moves first.
“We had expected the PBoC to cut rates in the first quarter. Now, we think the window is further out – probably by May.” — Bloomberg
