SHANGHAI- China kept its benchmark lending rates for corporate and household loans unchanged on Wednesday, as policymakers adopted a cautious approach amid signs of economic recovery, growing domestic inflationary pressure and aggressive global rate rises.
At the monthly fixing, the one-year loan prime rate (LPR) was kept at 3.70 percent, and the five-year LPR was unchanged at 4.45 percent, in line with market expectations of 22 respondents in the Reuters snap poll conducted this week.
China, along with Japan, has been a major outlier in a global run of policy tightening to tame rampant inflation with Beijing focused on stimulating a COVID-hit economy.
However, analysts see a lessening need for aggressive monetary easing after June economic data pointed to signs of recovery, even as China’s second quarter gross domestic product only grew a tepid 0.4 percent from a year earlier.
“The economy has started to recover and there is no need to lower 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 expect China’s economy to face more pressure over the coming months from a slowdown in global growth and a hit to consumption from soaring consumer prices.
The People’s Bank of China (PBOC) had recently signaled a less accommodative monetary policy in the second half of the year.
