SHANGHAI- China is expected to keep benchmark lending rates unchanged for a fifth month in January, a Reuters survey showed, although analysts think cuts next month are probable after the central bank pledged steps to boost a COVID-ravaged economy.
The imminent golden week holiday, the decision by the People’s Bank of China to leave its policy rate unchanged this week and a new mortgage rate mechanism have made a cut in the loan prime rate (LPR) on Friday unlikely.
“The upcoming LPR announcement, on the last working day before the Lunar New Year break, may not be the best moment,” Mark Williams, chief Asia economist at Capital Economics wrote in a note to clients. “We think next month is more likely.”
A poll of 33 market watchers conducted by Reuters this week showed 21 or 64 percent predicted no change to benchmark LPRs, which serve as the pricing reference for bank lending.
The one-year LPR currently stands at 3.65 percent, while the five-year LPR is 4.30 percent. China last cut both LPRs in August.
Eleven respondents forecast a cut to the five-year LPR while seeing no change to the one-year tenor. Only one respondent predicted a cut to the one-year LPR.
China’s economy grew just 3 percent in 2022, far below the official target but the government’s abrupt end to its the zero-COVID policy has fanned hopes of a robust recovery.
