The central bank of the People’s Republic of China is responsible for formulating and implementing monetary policies, preventing and defusing financial risks, and maintaining financial stability.
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China left its key rates unchanged on Monday, as Beijing faces a weakened yuan while awaiting political indications from the new administration of Donald Trump.
The People’s Bank of China maintained the 1-year prime lending rate at 3.1% and the 5-year LPR at 3.6%, according to the People’s Bank of China statement.
The 1-year LPR determines rates on business loans and most household loans, while the 5-year LPR serves as a benchmark for mortgages.
The decision was made Monday ahead of Donald Trump’s inauguration as the next president of the United States.
China’s offshore yuan has lost more than 3% since Donald Trump’s victory in the presidential election in early November. The tightly controlled domestic yuan also fell to a 16-month low.
Chinese economic activity accelerated more than expected in the final quarter of last year, as stimulus measures announced by Beijing since last September took effect and helped the economy achieve its annual growth target .
Despite the upbeat figures, economists have warned that some underlying growth drivers could be temporary, amid weak consumer demand, a deepening housing market crisis and looming tariff hikes in the part of the new Trump administration.
The Governor of the People’s Bank of China, Pan Gongsheng, raised in September the possibility of a reduction in the reserve requirement ratio, which would free up more liquidity for banks to lend, by the end of 2024. But the reduction has not yet taken place, despite its move to a “moderately flexible” rate. ” political position.
The People’s Bank of China surprised markets by cutting key short- and long-term lending rates in July, followed by a much-anticipated cut of 25 basis points in October. The central bank kept lending rates unchanged in November and December.
