China leaves benchmark rates steady, Yuan at weakest fixing since November - Hindustan Times
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China leaves benchmark rates steady, Yuan at weakest fixing since November

Reuters |
Jun 20, 2024 08:02 AM IST

The steady monthly LPR fixings underscore that Beijing's monetary easing efforts continued to be limited.

China left benchmark lending rates unchanged at a monthly fixing on Thursday, in line with market expectations.

China's central bank kept a key lending rate unchanged choosing not to loosen credit as data for May showed signs of persisting weakness in the world's No. 2 economy's manufacturing and real estate sectors.(AP)
China's central bank kept a key lending rate unchanged choosing not to loosen credit as data for May showed signs of persisting weakness in the world's No. 2 economy's manufacturing and real estate sectors.(AP)

The steady monthly LPR fixings underscore that Beijing's monetary easing efforts continued to be limited by narrowing interest rate margins and a weakening currency, despite a flurry of recent data showing more support is needed to shore up an uneven economic recovery.

The one-year loan prime rate (LPR) was kept at 3.45%, while the five-year LPR was unchanged at 3.95%.

In a Reuters survey of 30 market participants conducted this week, 21, or 70% of all respondents, expected both rates to stay unchanged.

China's new home prices fell at the fastest pace in more than 9-1/2 years in May, official data showed on Monday, with the property sector in a depressed state despite government efforts to rein in oversupply and support debt-laden developers.

New bank lending in China rebounded far less than expected in May and some key money gauges hit record lows, suggesting the world's second-largest economy is still struggling to pick up the recovery pace.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

The five-year LPR was lowered by a decent 25-basis-point in February to support the housing market.

Financial News, a central bank-backed newspaper, said in a commentary this week that China still has room to lower interest rates, but its ability to adjust monetary policy faces internal and external constraints.

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