China Maintains Stable Benchmark Lending Rates in September

China Maintains Stable Benchmark Lending Rates in September

22 Sep, 2023

 

China Maintains Stable Benchmark Lending Rates in September

 

China's banking sector opted to maintain its benchmark loan rates without changes for the month of September. This decision comes as the world's second-largest economy, which had previously experienced a slowdown, displayed signs of stabilization, largely attributable to recent policy support measures.

The People's Bank of China (PBOC) chose to keep the one-year loan prime rate, which serves as the reference rate for the majority of household and corporate loans in China, steady at 3.45%. Similarly, the five-year benchmark loan rate, which impacts most mortgage rates, remained at 4.2%. This announcement was made on Wednesday by the People's Bank of China.

This decision aligns with the expectations of economists for September. Last Friday, the PBOC also maintained its medium-term policy rate, following the announcement of a second reduction in the reserve requirement ratio requirements for all banks just the previous Thursday.

China's August retail sales and industrial production data, released on the preceding Friday, surpassed expectations. These data points, along with various other indicators such as inflation rates, trade volumes, and the Purchasing Managers Index (PMI), which are typically considered leading indicators, have collectively signaled early signs of improvement in the Chinese economy.

In August, China had reduced its one-year benchmark lending rate by 10 basis points in the second such reduction in three months. Surprisingly, the five-year benchmark lending rate remained unchanged.

It's worth noting that China's loan prime rate is calculated each month based on the proposed rates submitted by 18 designated commercial banks to the People's Bank of China.

 

 


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