China’s central bank kept its key rates unchanged, as widely expected, on Wednesday despite the tightening stance adopted by its global peers.
The People’s Bank of China kept the five-year loan prime rate, or LPR, the benchmark for mortgage rates, unchanged at 4.45%.
The rate was cut a record 15 basis points in May and five basis points in January.
The one-year LPR also remained unchanged at 3.70%. The previous rate change was a five basis point cut in January.
The LPR is set monthly based on the submission of 18 banks, although Beijing has influence in setting the rates. This lending rate replaced the traditional central bank benchmark lending rate in August 2019.
Last week, the PBoC had kept the one-year medium-term lending facility rate at 2.85% and the seven-day reverse repo agreement rate at 2.1%. The central bank had injected liquidity of CNY 100 billion through a one-year MLF and CNY 3 billion through seven-day reverse repo transactions.
Official data showed that the economy rose just 0.4% in the second quarter, casting doubt on Beijing’s ability to meet its full-year growth target of around 5.5%. Nevertheless, economic activity started to improve in June after the easing of pandemic-related restrictions.
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