The central bank of the People’s Republic of China is responsible for formulating and implementing monetary policy, preventing and mitigating financial risks, and maintaining financial stability.
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China has abandoned its benchmark interest rates on loans unchanged Monday, as Beijing grapples with a weakening yuan as it awaits policy cues from the incoming Donald Trump administration.
The People’s Bank of China kept the one-year base interest rate at 3.1% and the five-year LPR at 3.6%, according to a statement from the PBOC.
The 1-year LPR determines rates for corporate and most household loans, while the 5-year LPR serves as a reference for mortgage loans.
The decision came ahead of Donald Trump’s inauguration as the next US president on Monday.
China’s offshore yuan has lost more than 3% since Donald Trump won the presidential election in early November. The tightly controlled mainland yuan also retreated close 16-month minimum.
China’s economic activity accelerated more than expected in the final quarter of last year, as Beijing’s stimulus measures announced last September took effect and helped the economy meet its annual growth target.
Despite optimistic headline figureseconomists warned that some of the underlying drivers of growth could be temporary, amid weak consumer demand, a deepening slump in the housing market and threatened tariff increases by the incoming Trump administration.
PBOC Governor Pan Gongsheng in September marked the possibility of a reduction in the reserve requirement ratio, which would free up more cash for banks to lend, by the end of 2024. But the reduction did not come, despite his shift to a “moderately loose” political stance.
The PBOC surprised the markets by cutting the main short-term and long-term interest rates on loans in Julyafter which follows a widely expected 25 basis point cut in October. The central bank kept the interest rates on loans unchanged in November and December.
