China’s benchmark lending rates have been kept unchanged, in line with expectations, following a recent hold on policy rates. Economists suggest that Beijing will need to increase support in order to bolster the country’s struggling economy.
Loan Prime Rates Unchanged
The People’s Bank of China announced on Thursday that the one-year loan prime rate would remain steady at 3.55%, while the five-year LPR would stay unchanged at 4.2%. These loan prime rates are determined monthly based on the interest rates charged by 18 designated commercial banks to their top clients.
Anticipated Move
The decision to keep the rates steady was widely anticipated after the central bank maintained its key policy rate, which influences the medium-term lending facility rates used by banks to price LPRs, earlier this week.
Challenges Ahead
Limited Options
Despite market expectations for large-scale stimulus measures, Beijing has yet to deliver, potentially due to mounting government debts and limited options. However, the upcoming meeting of China’s top decision-making body, the Politburo, later this month is anticipated to include discussions on economic affairs and the announcement of additional stimulus to stimulate growth.
