Chinese banks hold benchmark lending rates steady

20th May 2024 07:14

(Sharecast News) - Chinese banks kept their benchmark lending rates unchanged after the People's Bank of China also chose to stay put on a key rate on loans it offers to lenders.

The nation's banks held one-year loan prime rates at 3.45% on Monday, as expected by economists, while the five-year rate, a reference for mortgages, was also kept = at 3.95%, in line with forecasts.

Last week, the central bank rolled over the maturing medium-term lending facility, its one-year policy loan, but stopped short of trimming the rate, indicating its intention to help along China's nascent economic recovery without putting any undue stress upon the yuan.

The PBOC was widely expected to cut rates or make further cash injections into the financial system by reducing the amount of reserves banks must keep, making it easier for lenders to snap up new government bonds, as Beijing looks to provide more fiscal support for the economy.

China has already started selling the first batch of what will be RMB 1.0trn yuan (£109.44bn) special sovereign bonds, in an effort to maintain infrastructure investment, and revealed it will launch a nationwide program to unleash RMB 300.0bn (£32.66bn) in cheap funding to help state-owned firms purchase unsold homes. It has also removed the floor on mortgage rates and lowered the minimum down payment for homebuyers.

Reporting by Iain Gilbert at Sharecast.com