China kept its benchmark rates for corporate and domestic borrowing on Wednesday, with policymakers taking a cautious approach amid signs of economic recovery, mounting domestic inflationary pressure and aggressive global interest rate hikes.
On monthly fixation, the one-year prime lending rate (LPR) was held at 3.70%, and the five-year LPR remained at 4.45%, in line with the expectations of 22 respondents in a Reuters poll conducted this month. week.
China, along with Japan, has been a major exception amid a global race to tighten monetary policy to tame rampant inflation, with Beijing focusing on stimulating the Covid-19-racked economy.
However, analysts see a diminishing need for aggressive monetary easing after economic data in June showed signs of recovery, even as China’s second-quarter gross domestic product grew by just 0.4% from a year earlier.
“The economy has started to recover and there is no need to lower the LPR,” said Xing Zhaopeng, senior China strategist at ANZ.
But Xing still sees the possibility of LPR reductions in the fourth quarter of this year.
Many economists predict that China’s economy will face more pressure in the coming months due to a slowdown in global growth and the impact on consumption from rising consumer prices.
The People’s Bank of China (PBOC) had recently signaled a less expansionary monetary policy in the second half of the year.
Source: CNN Brasil
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