Chinese banks kept benchmark lending rates unchanged yesterday for the third straight month, reflecting ongoing efforts to keep the yuan stable even as officials vowed to cut interest rates to support the economy.
According to NikkeiAsia, the People’s Bank of China said the one-year loan prime rate (LPR), the corporate lending rate, remained at 3.1%, while the five-year mortgage benchmark was maintained at 3.6%. The LPR is calculated by the central bank every month, based on quotes submitted by 20 commercial banks.
The Japanese economic agency, also said investors are expecting the PBOC to cut interest rates more aggressively this year after the country’s top leadership shifted its tone on monetary policy in a December meeting to “moderately loose” to support economic growth. But Nikkei analysts note that the outlook for monetary easing has sent government bond yields to historic lows, putting downward pressure on the yuan against the U.S. dollar.
After the yuan hit its lowest level in 16 months in early January, the PBOC officials vowed to guard against the risk of exchange rate “overshooting.”
It also stepped up efforts to defend the currency, NikkeiAsia added.
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