China has kept its main lending rates unchanged in December, signaling economic stability and boosting confidence as the nation continues its economic recovery efforts.
The one-year Loan Prime Rate (LPR), which serves as a benchmark for lending rates across the country, remained at 3.1%, unchanged from November. The over-five-year LPR, influencing many mortgage rates, also stayed steady at 3.6%, according to the National Interbank Funding Center.
The LPR is a key rate that banks use when setting interest rates for loans and mortgages. It’s based on rates from the People’s Bank of China’s (PBOC) open market operations and serves as a reference for financial institutions across the country.
Earlier this month, Chinese leaders pledged at top economic meetings to enhance monetary easing measures, including potential interest rate reductions, to support the economy. Despite these pledges, the PBOC kept the one-year and five-year LPRs unchanged in December, following a previous 25 basis point cut in October. The central bank had earlier surprised markets by reducing major short and long-term lending rates in July.
Wang Qing, chief macro analyst at Golden Credit Rating, commented on the recent LPR decisions, stating, “After the introduction of new policies, economic sentiment has improved since October, and the real estate market has shown significant recovery.”
By maintaining the current LPR levels, China aims to continue guiding financing costs for businesses and residents downward, supporting the real economy. This approach is key to the steady lending rates observed over the past two months, Wang explained.
Keeping lending rates steady helps sustain economic momentum and supports ongoing improvements in crucial sectors like real estate, benefiting both enterprises and individuals across China.
Reference(s):
cgtn.com
