China’s PBOC keeps LPR unchanged at 3.45%

The People’s Bank of China (PBOC) left the one-year loan prime rate (LPR) unchanged at 3.45 per cent in line with the consensus forecast among economists, Reuters reported on Monday.

Chinese yuan was little changed which illustrate the desire to ensure the existing amount of credit is used efficiently since fast-growing money supply has yet to translate into a significant improvement in actual borrowing.

“A cut at this stage could trigger additional depreciation pressure, something the PBOC wants to avoid. Therefore, it may stick to quantitative easing tools for now,” said head of China economics at Capital Economics Julian Evans-Pritchard.

Senior China strategist at Australia & New Zealand Banking Group Ltd. Xing Zhaopeng said banks were not ready to cut rates in January, he also cited a deterioration in net interest margins for banks as a “big concern.”