China leaves lending benchmark rates unchanged as expected
SHANGHAI/SINGAPORE (Reuters) — China stood pat on benchmark lending rates at the monthly fixing on Wednesday, matching market expectations, after the central bank kept its medium-term policy rate steady earlier last week.
But market watchers continued to expect Beijing to deliver further monetary easing into the new year to support a sputtering economic recovery as deflationary pressure push up real borrowing costs.
The one-year loan prime rate (LPR) was kept at 3.45%, while the five-year LPR was unchanged at 4.20%.
Most new and outstanding loans in the world's second-largest economy are based on the one-year LPR, which stands at 3.45%. It was lowered twice by a total of 20 basis points in 2023.
The five-year rate influences the pricing of mortgages and is 4.20% now. It was lowered by 10 basis points so far this year.
In a Reuters survey of 28 market watchers conducted this week, all participants predicted no change in either the one-year or five-year LPR.
The steady fixings came after the central bank kept its medium-term policy rate unchanged, and the one-year LPR is loosely pegged to the medium-term lending facility (MLF) rate.
Market participants typically see changes in the MLF as a precursor to changes in the LPR.
The People's Bank of China (PBOC) ramped up liquidity injections through medium-term policy loans last week, while keeping the interest rate unchanged.
The central bank injected a net 800 billion yuan ($112.22 billion) of fresh funds into the banking system through medium-term lending facility (MLF) loans, booking the biggest monthly increase on record.
«Although the PBOC avoided a reserve requirement ratio (RRR) cut in December and injected net liquidity at a record high… we still look for 20 basis
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