China Holds Key Lending Rates Steady

Source Credit : CNBC

China kept its benchmark lending rates unchanged Friday, following sweeping monetary easing measures rolled out last month, and as a trade deal with the U.S. eases some growth concerns.

The People’s Bank of China held the 1-year loan prime rate at 3.0% and 5-year LPR at 3.5%, according to a statement Friday, in line with Reuters poll estimates.

Last month, Chinese authorities cut the lending rates for the first time since October by 10 basis points, in their bid to cushion the impact from trade tensions with Washington. A slew of commercial banks also trimmed their deposit rates to protect their net interest margin.

LPR, normally charged to banks’ best clients, is calculated based on a survey of dozens of designated commercial banks that submit proposed rates to the central bank.

The 1-year LPR influences corporate and most household loans in China, while the 5-year LPR serves as a benchmark for mortgage rates.

Trade-war fears have receded to some extent after U.S. and Chinese trade representatives earlier this month agreed to honor the consensus reached in Geneva in May, allowing for rare earth and tech trade between the two countries while suspending prohibitive levels of tariffs on each other.

Chinese offshore yuan, which has strengthened over 2% this year, last traded at 7.1805 against the U.S. dollar, regaining ground after weakening to a record low of 7.4287 in early April when U.S. President Donald Trump slapped an eye-watering 145% tariffs on the Chinese imports.