The People’s Bank of China (PBoC) has left the 1-year loan premium rate unchanged at 3.70%. (estimated at 3.65%). Also has left the 5-year loan premium rate unchanged at 4.60% (4.55% estimate).
According to the Reuters poll a reduction was expected.
“The Loan Principal Rate (LPR), which banks normally charge their best customers, is set on the 20th of every month, when the 18 designated commercial banks submit their proposed rates to the People’s Bank of China.”
“A vast majority of traders and analysts questioned in a Reuters poll on Tuesday expect a drawdown this month.“.
“Among them, 11, or 39% of all respondents, forecast a marginal cut of 5 basis points (bps) for both types of 1-year (LPR) and 5-year loans on Wednesday. Another 6 participants also expected a reduction in rates within a range of 5 to 10 bps“.
Nevertheless, Last week, the PBoC rolled the MLF, or Medium-Term Lending Facility, at a flat interest rate.which could have been a precursor to today’s decision.
On the PBoC interest rate decision
The interest rate decision in China is announced by the People’s Bank of China (PBoC). Usually, if the bank offers an optimistic view on inflation expectations and the Chinese economy and raises its interest rates, it is positive and bullish for the CNY. On the other hand, if the bank report is negative and maintains or lowers interest rates, it is negative and bearish for the currency.
Source: Fx Street
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