China maintains the benchmark one-year loan rate at 3.85% again

Beijing, Jul 20 (efe-epa).- China maintained at 3.85 percent the reference rate for loans that the People’s Bank of China (PBC, central) began to measure in August last year with the aim of reducing the cost of borrowing corporate, the agency reported Monday.

Thus, the so-called benchmark rate for one-year loans remains for the third consecutive month at 3.85 percent, since it registered its last variation in April, when the BPC reduced it from 4.05 percent in the months of February and March.

The benchmark rate for five-year loans stood at 4.65 percent, the same as the previous month.

This new rate is calculated from contributions to the prices of a number of banks, including small lenders that tend to have higher financing costs and greater exposure to bad loans.

The change in measurement is intended “to better reflect changes in the market to guide borrowing costs to a lower level and thereby support the real economy,” according to the state news agency Xinhua.

In a report sent to its subscribers, the British consultancy firm Capital Economics considers that the data is as expected, and that the BPC is going to focus more on the financial risks accumulated this year than on continuing to relax its monetary policy.

“It is unlikely that the BPC will cut these rates again in the short term. The debate is over how to manage nonperforming loans derived from COVID-19,” said economist Martin Rasmussen, of the aforementioned consultancy. EFE-EPA

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