China keeps lending benchmark rates unchanged for 16th month
Shanghai, China, Aug 20 (EFE).- The Chinese central bank Friday left the benchmark interest rate unchanged for the 16th consecutive month.
Thus the one-year loan prime rate (LPR), a market-based benchmark lending rate, will remain at 3.85 percent, while the five-year LPR will be steady at 4.65 percent.
The People’s Bank of China changed the one-year LPR in April 2020, when the bank reduced the rate from 4.05 percent in February-March.
LPR is an interest rate that commercial banks, including smaller lenders, charge their clients with higher financing costs and outstanding loans to reflect market demand for funds in a better way.
It aims to lower the costs of borrowing and support the economy.
Analyst Julian Evans-Pritchard, from consulting firm Capital Economics, expected the bank to lower the interest rates to boost the economy.
“It is losing its inertia,” with key indicators, like industrial production performing, below expectations, he said.
The expert noted that any large-scale credit-based stimuli did not appear on the table for now.
An official report released in March this year said China would try to maintain a monetary policy that would be “flexible, precise, appropriate and moderate.”
Profits of Chinese industrial firms grew by 66.9 percent year-on-year in the first six months of 2021, a report released in July showed.
The jump was partly due to the coronavirus-induced slump last year as the Chinese economy got paralyzed by the pandemic in the first three months of 2020.
Despite an overall increase in the industrial profits “in a sustained manner,” NBS warned about the “unevenness in the recovery of corporate profitability” as private firms and small businesses faced a slow rebound. EFE