China Keeps Loan Prime Rates Unchanged As Expected

(RTTNews) - The People's Bank of China left its benchmark lending rates unchanged on Wednesday as it monitor the impact of recent policy adjustments. The PBoC maintained its one-year loan prime rate at 3.10 percent. Likewise, the five-year LPR, the benchmark for mortgage rates, was retained at 3.60 percent.

The bank had cut its both LPRs by 25 basis points each in October.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

Earlier in a note, economists at Capital Economics said the PBoC rarely does back-to-back rate cuts and is likely to monitor the impact of its recent policy changes before making any further adjustments. Moreover, policymakers will attempt to reduce additional downward pressure on the renminbi.

"Although a weak currency doesn't preclude PBOC rate cuts, it does make them less likely, especially now that the economy has regained some momentum, reducing the urgency behind monetary easing," economists said. Last month, PBoC Governor Pan Gongsheng said the central bank could further lower key rates and reserve requirement ratio before the year-end.

Earlier this month, the Ministry of Finance approved a CNY 10 trillion fiscal package to bolster economic growth. The package was intended to refinance debt of local governments.