China stands pat on benchmark rate, signals brief pause in easing efforts GlobeBusiness
China held its benchmark lending rate steady on Wednesday, though analysts believe the widely expected decision signals just a brief pause in the central bank’s efforts to support an economy ravaged by the coronavirus pandemic.
A Reuters survey of traders and analysts showed more than 70 per cent of them expected China would stand pat on the benchmark lending rate in May.Markets usually take the People’s Bank of China’s stance on its medium-term lending facility rate – which serves as a guide for the LPR – as an indicator for any adjustment to the lending benchmark.
Jacqueline Rong, senior China economist at BNP Paribas in Beijing, said the steady LPR does not mean the PBOC won’t deliver additional rate cuts or reduce banks’ reserve requirement ratio in June. Gross domestic product shrank 6.8 per cent in the first quarter year-on-year, the worst quarterly contraction on record, as the pandemic and tough containment measures paralyzed activity across the country.
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