China keeps lending rates steady, opts for ‘targeted measures’ to help firms hit by coronavirus wave
- The People’s Bank of China kept its one-year loan prime rate (LPR) at 3.7 per cent on Wednesday
- The five-year LPR, which is the reference for mortgages, also remained unchanged at 4.6 per cent
China’s central bank held its benchmark lending rate steady on Wednesday, showing a preference for targeted support of Omicron-hit industries and the use of fiscal tools to shore up slowing economic growth.
The one-year loan prime rate (LPR), which is calculated on quotes from more than a dozen state-owned and foreign funded banks, was left unchanged at 3.7 per cent by the People’s Bank of China (PBOC).
The five-year LPR, which is the reference rate for mortgages, was kept at 4.6 per cent.
China’s central bank has been under pressure to enact more monetary loosening, as the country is facing multiple headwinds, including weak consumption; disruptions to production and supply chains that have been amplified by Beijing’s zero-Covid strategy; capital outflows triggered by the US Federal Reserve’s rate hike; and rising commodity prices due to war in Ukraine.
For now, policymakers are mostly relying on targeted measures to help support firms hit by the latest virus wave
The central bank cut two major policy rates – the seven-day reverse repo and one-year medium-term lending facility – by 10 basis points in mid-January.
