The Central Bank of the People’s Republic of China is responsible for formulating and implementing monetary policies, preventing and resolving financial risks, and maintaining financial stability.
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China kept key benchmark lending rates unchanged on Friday at a fixed monthly time.
Market watchers polled by Reuters expected Because the Federal Reserve cut interest rates by 50 basis points, it provides China with more room to reduce domestic borrowing costs without causing a sharp depreciation of the yuan.
The People’s Bank of China (PBOC) said it will maintain the one-year loan prime rate (LPR) at 3.35% and the five-year loan prime rate (LPR) at 3.85%.
The one-year LPR affects corporate and most household loans in China, while the five-year LPR is the benchmark for mortgage rates.
U.S. interest rate cuts provide China with greater monetary flexibility to focus on easing the debt burden on consumers and businesses as it seeks to stimulate investment and spending.
China surprised markets in July by cutting key short- and long-term lending rates in a move aimed at boosting its economic growth as the country faces a protracted housing crisis and weakening consumer and business confidence.
August, China Retail sales, industrial production and urban investment All growth was below expectations and below expectations of economists polled by Reuters. Urban unemployment rose to a six-month high and house prices fell at their fastest annual rate in nine years.
Disappointing economic data highlighted sluggish economic momentum and renewed calls for more fiscal and monetary stimulus.
However, experts told CNBC that easing monetary policy and lowering interest rates may not be enough to reverse China’s economic downturn.Asian road sign“Friday morning.
“China’s problem is not a supply problem, it’s a demand problem,” said Brendan Ahern, chief investment officer of China Resources Holdings, stressing the need for more fiscal support to boost consumer confidence and raise real estate prices.
“They can cut interest rates to zero, but that won’t necessarily accelerate the recovery in the housing market,” said Peter Boockvar, chief investment officer at Bleakley Financial Group.
Both Ahern and Boockvar believe Beijing will see a richer economic rebound when house prices stop falling.
Several major banks retreated Their forecast for China’s full-year GDP growth is below the government’s official target of 5%. Bank of America lowered China’s 2024 GDP growth forecast to 4.8%, and Citigroup lowered its forecast to 4.7%.
