China Retains Loan Prime Rates As Expected
January 19 2025 - 7:04PM
RTTF2
The People's Bank of China maintained its interest rates for the
third straight session on Monday as policymakers await the stance
of new US administration. The PBoC left its one-year loan prime
rate at 3.10 percent. Similarly, the five-year LPR, the benchmark
for mortgage rates, was held at 3.60 percent. The decision matched
expectations.
The bank had reduced its both LPRs by 25 basis points each in
October 2024.
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.
Although the ability to manoeuvre the monetary policy is limited
due to the weakness of yuan, the central bank is likely to lower
policy rates amid trade tariff hike threats by US President-elect
Donald Trump.
Beijing has unveiled a range of fiscal and monetary easing
measures last year, which helped the economy to achieve its around
5 percent growth target in 2024. However, economic growth is
expected to weaken this year as a whole.
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