The People’s Bank of China (PBOC) on Wednesday held its benchmark interest rate unchanged, in line with the market’s expectation. Analysts called the move a sign of a brief pause in PBOC’s efforts to support the virus-hit economy. The central bank holds its five-year loan prime rate (LPR) at 4.65%, while the one-year LPR was kept steady at 3.85%.
The central bank also unexpectedly kept its medium-term lending facility (MLF) rate steady last Friday. The MLF rate is usually used as an indicator for any adjustment to the LPR. However, analysts said that the move does not mean the central bank will not lower banks’ reserve requirement ratio (RRR) further in June.
China’s GDP shrank 6.8% year-on-year in the first quarter, marking the deepest quarterly contraction in history. The country has cut the LPR twice in 2020, while also issuing other easing measures to prop up growth. Some analysts expect Beijing to roll out more aggressive fiscal and monetary stimulus soon to help the economy, possibly on May 22 when China’s annual National People’s Congress starts.
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Published on May 20, 2020 3:15 PM (GMT+8)Last Updated on May 20, 2020 3:15 PM (GMT+8)
