The People’s Bank of China (PBOC) building in Beijing on December 15, 2022.
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China’s central bank Wednesday Maintain key benchmark lending rates No change as Beijing assesses the effectiveness of its recent stimulus measures.
The People’s Bank of China said it would maintain the one-year loan preferential interest rate at 3.1% and the five-year loan market quotation rate at 3.6%.
market observer Reuters survey predicts The central bank kept lending rates unchanged this month.
Bruce Pang, chief economist and head of research for Greater China at Jones Lang LaSalle, said, “There is no immediate need to adjust the LPR this month.” influence.
China’s commercial banks have hit record low net interest margins, limiting their ability to support lower lending rates, Pang said. “While another rate cut before the end of the year seems unlikely, there is still potential for a rate cut in 2025.”
The 1-year LPR affects corporate and most household loans in China, while the 5-year LPR is the benchmark for mortgage rates.
Interest rate decision After cutting interest rates by 25 basis points The 1-year and 5-year LPR were announced last month, followed by China economic data for October This underscores sluggish economic momentum despite the recent announcement of a raft of stimulus measures.
China’s industrial production and fixed asset investment grew less than expected in October. The annual decrease in real estate investment from January to October also increased compared with the same period last year.
Only retail sales exceeded expectations, rising 4.8% year-on-year, showing that recent stimulus measures are starting to filter into some parts of the economy.
Since late September, Chinese authorities have stepped up efforts Stimulus measures were announced to spur economic growth, but growth has been weighed down by a protracted housing crisis and weak consumer and business confidence.
Earlier this month, the Ministry of Finance announced The five-year financial plan totals 10 trillion yuan ($1.4 trillion) to address local government debt issues while signaling that more economic support may be available next year.
Pan Gongsheng, president of the People’s Bank of China, said the central bank also planned to maintain supportive monetary policy.
Morgan Stanley expects China’s economic growth to slow to about 4% annually over the next two years and downgraded China’s stock market to “slight underweight” in a report on Sunday, citing a deflationary environment and trade tensions. Intensification is listed as a risk.
“We believe there is little chance that the Chinese government will implement sufficient fiscal stimulus ahead of schedule to target the consumption and housing markets,” analysts said.
Goldman Sachs’ report on Monday showed that the bank also predicts that China’s GDP growth may slow to 4.5% in 2025 from 4.9% this year.
However, Goldman Sachs maintains an “overweight” stance on Chinese stocks and expects the benchmark CSI 300 index to rise 13% next year.
An election victory by Donald Trump could impose higher tariffs on Chinese exports, adding to uncertainty in China’s export-intensive economy.
