China keeps benchmark lending rates unchanged for 16th month in September
- China kept its benchmark lending rates unchanged for the 16th straight month on Sunday
SHANGHAI: China kept its benchmark lending rates unchanged for the 16th straight month on Sunday, in line with market expectations.
Why it’s important
The steady loan prime rates underscored the limited scope for fresh monetary easing after some major global central banks recently adopted a more hawkish stance, even as the yuan continued to strengthen.
By the numbers
The one-year LPR was kept at 3.00%, while the five-year LPR was unchanged at 3.50%.
Fed chair signals ‘work to do’ on high US inflation
All 21 market participants in a Reuters survey forecast no change to either rate.
Context
The Federal Reserve raised interest rates last week and flagged more hikes in the coming months, with new US central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration’s inability so far to control inflation that policymakers worry could worsen.
The yield premium on benchmark 10-year U.S. Treasuries over Chinese government bonds hovered near the highest level on record after the Fed rate hike.
China’s slower loan growth is becoming the new normal as shrinking property and local government sectors sap credit demand faster than emerging industries can fill the gap, central bank Governor Pan Gongsheng said.