China’s central bank maintained its benchmark rates on Thursday, as widely expected, as the economy logged a strong growth after the unwinding of zero-Covid policy.
The People’s Bank of China left its one-year loan prime rate, or LPR, unchanged at 3.65 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 4.30 percent.
Earlier, the bank had reduced the five-year LPR rate by 15 basis points each in May and August 2022, and by 5 basis points in January 2022. The one-year LPR was last lowered in August 2022.
The LPR is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. The LPR replaced the central bank’s traditional benchmark lending rate in August 2019.
Markets widely anticipated the PBoC to hold the LPR today as the medium-term lending facility, or MLF, which acts as a guide to the LPR, was kept unchanged early this week.
On Monday, the PBoC had added CNY 170 billion via one-year MLF at an interest rate of 2.75 percent. The bank also conducted seven-day reverse repo operations worth CNY 20 billion at a rate of 2.00 percent.
In the first quarter, the second-largest economy logged an annual growth of 4.5 percent, stronger than the 2.9 percent expansion registered in the fourth quarter of 2022, official data showed early this week.
After a weaker 3.0 percent economic growth in 2022, the Chinese government set a moderate growth target of around 5.0 percent for this year.
The International Monetary Fund had projected growth outlook for China at 5.2 percent this year and 4.5 percent in 2024.
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