China keeps benchmark lending rates unchanged as Beijing assesses impact of stimulus
China’s central bank on Wednesday kept its key benchmark lending rates unchanged, as Beijing assesses the impact of existing stimulus measures.
The People’s Bank of China said it would keep the 1-year prime lending rate at 3.1%, and the 5-year LPR at 3.6%.
Market watchers polled by Reuters had expected the PBOC to keep lending rates unchanged this month.
In October, China reported slower-than-expected growth in industrial output and fixed-asset investment. The annual decline in real estate investment from January to October also accelerated sharply from a year earlier.
Only retail sales beat expectations, rising 4.8% year-on-year, suggesting that recent stimulus has begun to trickle down to certain sectors of the economy.
Since late September, Chinese authorities have ramped up stimulus announcements to spur economic growth, which has been dragged down by a prolonged property crisis as well as weak consumer and business sentiment.
Earlier this month, the Ministry of Finance unveiled a 5-year fiscal package totaling 10 trillion yuan ($1.4 trillion) to tackle local government debt problems, while signaling more economic support could come next year.
China’s central bank also planned to maintain supportive monetary policy, said Governor Pan Gongsheng, who had indicated in October that there was still room to cut several key policy rates by end of the year.
Morgan Stanley expects China’s growth to slow to around 4% in each of the next two years, and has downgraded Chinese equities to “slight underweight” in a note dated Sunday, naming a deflationary environment and rising trade tensions as risks.
Donald Trump’s election victory, which is likely to bring higher tariffs on Chinese exports, has added to the uncertainty over China’s export-heavy economy.
Souce: CNBC
