China Maintains Benchmark Lending Rates
(RTTNews) - China's central bank left its key interest rates unchanged on Monday despite strengthening calls for monetary policy easing to support economic growth amid a notable slowdown in inflation.
The People's Bank of China retained its one-year loan prime rate, or LPR, at 3.65 percent. Likewise, the five-year LPR, the benchmark for mortgage rates, was left unchanged at 4.30 percent.
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.
The PBoC was widely expected to hold the LPR today as the medium-term lending facility, or MLF, which acts as a guide to the LPR, was maintained last week.
The central bank had infused CNY 125 billion into the financial market last week through one-year MLF at an unchanged rate of 2.75 percent.
In April, consumer prices rose only 0.1 percent, the weakest inflation since February 2021. Further, producer prices slid 3.6 percent, marking the biggest decrease since May 2020.
Subdued consumer price inflation as well as sharp fall in factory gate prices provide space for the central bank to take measures to cushion economic growth.
Recent data suggested that the economy is losing momentum after the lifting of Covid restrictions boosted growth in the first quarter.
Beijing aims to achieve a growth target of around 5.0 percent in 2023. The International Monetary Fund had projected China's economy to grow 5.2 percent this year and 4.5 percent in 2024.
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