China kept benchmark lending interest rates unchanged for the fourth consecutive month on Tuesday, matching the forecasts of most market watchers who nevertheless expect further monetary easing to prop up a slowing economy.
The one-year loan prime rate (LPR) was left at 3.65%, while the five-year LPR was held at 4.30%.
The People’s Bank of China (PBOC) last week increased cash injections into the banking system and said it would keep its one-year medium-term lending facility rate (MLF) unchanged for a fourth month. Market watchers regard MLF announcements as guides to any LPR changes.
In a subsequent Reuters poll, 17 of 27 market watchers predicted no change to either LPR but said more easing measures were likely already underway after senior leaders last week vowed to focus on stabilising the $17 trillion economy in 2023 and step up policy adjustment to ensure targets are hit.
“The PBOC will probably guide LPRs lower in the coming months, especially the five-year LPR to support real estate and longer-term business loans,” Commerzbank economists said in a client note.
A number of officials in recent weeks have pledged to ensure sufficient financial market liquidity and implement proactive fiscal policies to underpin the economy next year.
Xing Zhaopeng, senior China strategist at ANZ, said with rates unchanged, household spending would continue without any increase in disposable income.