August 19, 2024 at 11:03PM
Last month the People’s Bank of China were in a rate cutting mood:
cut repo rates on July 22:
PBoC announces cut to 7-day reverse repo rate to 1.70% from 1.80%
at the same time the Bank lowered collateral requirements for medium term lending facility loans
On the same day they cut LPRs:
China cuts 1 and 5 year loan prime rates by 10 basis points each
Then they followed up three days later with a surprise, shock, cut to their Medium-term Lending Facility (MLF) rate:
People’s Bank of China reduces 1 year Medium-term Lending Facility (MLF) rate to 2.3%
Today its Loan Prime Rate (LPR) setting day again.
Reuters survey of 37 analysts shows all expect both one- and five-year LPRs to be left on hold, currently
3.35%
and 3.85%
respectively.
Analysts cite
shrinking interest margins at lenders as a key constraint
discouraging commercial banks from further lowering the lending
benchmark rates. The People’s Bank of China is also wary that even lower interest rates may weaken the yuan further and spur capital
outflows.
This article was written by Eamonn Sheridan at www.forexlive.com.
