China Keeps Lending Rates Unchanged As Expected

(RTTNews) - China central bank retained its benchmark lending rates as expected on Monday after the government rolled out measures to support the property market. The People's Bank of China left the one-year loan prime rate unchanged at 3.45 percent.

Likewise, the five-year LPR, the benchmark for mortgage rates, was maintained at 3.95 percent. The five-year LPR was last lowered by 5 basis points in February to support the property market.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

The interest rate decision came in line with expectations as the medium-term lending facility, which acts as a guide to loan prime rates, was left unchanged last week. The bank had conducted the CNY 125 billion of one-year MLF facility at an interest rate of 2.5 percent.

Last week, China also started a CNY 1 trillion special long term government bonds issuance that is intended to fund strategic projects.

Official data showed that China's industrial output growth accelerated to 6.7 percent in April driven by robust exports. However, growth in retail sales softened to 2.3 percent reflecting an uneven economic recovery necessitating more efforts from the part of the government to achieve the official growth target.

The recent projections from the Organization for Economic and Co-operation and Development revealed that Beijing is likely to miss the official target of about 5 percent growth this year. The second-largest economy is forecast to grow 4.9 percent this year and 4.5 percent in 2025.