The Banco Popular de China building (PBOC) in Beijing, China, on Thursday, December 15, 2022.
Bloomberg | Getty images
China is expected to maintain its raw rates of unchanged loan on Monday, with the 1 -year LPR with 3.1% and 5 years to 3.6% as the Central Bank seems focused on stabilizing Yuan in the midst of commercial tensions with the United States.
The decision of the Popular Bank of China occurs when China reported better economic data than expected this month, with the GDP of the first quarter that grows to 5.4% year after year, which allows space to keep the stable rates.
Retail sales and industrial production numbers also exceed the expectations of economists surveyed by Reuters.
The 1 -year LPR influences corporate and domestic loans in China, while the 5 -year LPR serves as a point of reference for mortgage rates. The PBOC has maintained the stable LPRs since October last year.
After the announcement, the Yuan in Chinese land It was quoted in 7,2995 against the dollar, while the Yuan on the high seas was marginally strengthened to 7,2962 against the Greenback.
The CSI 300 of Continental China increased 0.36%.
PBOC’s decision was in line with a survey of reuters economists, with 87% waiting for the PBOC to keep the stable rates.
Dutch Bank Ing had also predicted in a note last week that the PBOC would probably maintain rates, with Lynn Song and Min Joo Kang analysts pointing out that it was unlikely that the LPR changes without the 7 -day repo rate being reduced first.
The 7 -day repo rate is currently 1.5%, and was last reduced at 20 basic points in September.
However, Ing also said that “low inflation and strong winds against winds against the middle of the increasing tariff threats provide a strong argument for flexibility. But currency stabilization considerations can make China’s Popular Bank wait until the United States Federal Reserve reduces loan costs.”
Ryota Abe, an economist of Sumitomo Mitsui Banking Corporation, told CNBC that PBOC is unlikely that “use the currency to counteract economic difficulties because it could lead to a mass capital exit.”
The United States has imposed tariffs of up to 245% in Chinese imports, while China has slapped 125% of US tariffs.
Although GDP growth figures were encouraging, consumer prices in the second largest economy in the world remained in deflationary territory, and the reading of the CPI in March showed that prices fell 0.1% year after year.
The prices of the producer fell 2.5% in March, marking the 29th consecutive month in deflationary territory and seeing the greatest contraction since November 2024.
