China's benchmark lending rate remains unchanged for third month as economy rebounds

Source: Global Times Published: 2020/7/20 12:38:40

A view of the PBC building in Beijing Photo: VCG

China's new benchmark lending rate remained unchanged in July compared to the previous month, with some experts predicting China will continue to maintain the rate at its current level as the economy improves. 

According to statistics released on Monday by the People's Bank of China, China's central bank, China's one-year loan prime rate (LPR) stood at 3.85 percent in July, while five-year LPR stood at 4.65 percent, both unchanged from the previous month. 

The PBC has not changed the LPR for three consecutive months. 

Wu Chaoming, vice president of the Chasing Institute, told the Global Times on Monday that the government didn't change the lending rate as China's economy continues to show an improvement trend, with second-quarter GDP moving to a positive growth of 3.2 percent and economic growth expected to increase further in the second half of the year. 

He said China's future monetary policies will enter a "digestion period" during which the effects of previous policies will manifest, and the government will maintain a certain interest rate level to allow for policy space for future uncertainties. 

He also noted that chances are relatively low that China will lower the LPR in the second half of the year. 

"As China's economy is improving and overseas economies are speeding up their recoveries, Chinese companies have walked out of the worst period under the shadow of the coronavirus. As a result, periodical monetary policies are gradually withdrawing, and the PBC is no longer impulsively lowering the interest rate level," Wu told the Global Times. 

Mainland stocks rose on Monday, with the Shanghai Composite Index edging up 2.62 percent, and the Shenzhen market rising 1.74 percent. Lowering the LPR is usually considered a favorable policy for stock markets. 

Posted in: ECONOMY

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