China keeps benchmark lending rates steady amid rising tariff risks

[Pelican Press 0]

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China keeps benchmark lending rates steady amid rising tariff risks

The People’s Bank of China (PBoC) has set up a fintech committee.

Zhang Peng | LightRocket | Getty Images

China kept its key lending rates unchanged Monday, as Beijing prioritizes financial stability over interest rate easing to bolster the economy.

The People’s Bank of China held the 1-year loan prime rate unchanged at 3.1%, and the 5-year LPR at 3.6%  

The benchmark lending rates —

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— are calculated monthly based on designated commercial banks’ proposed rates submitted to the PBOC. The one-year LPR influences corporate loans and most household loans in China, while the five-year LPR serves as a benchmark for mortgage rates.

The decision on Thursday was in line with expectations

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PBOC Governor Pan Gongsheng

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that a stable yuan has been critical to maintaining global financial and economic stability. While many currencies have fallen against a stronger U.S. dollar, the yuan has remained largely stable, he added.

The ******** yuan has fallen 2.5% against the greenback since Donald Trump’s election victory in November.

Pan also noted that China was

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while reiterating Beijing’s commitment to adopt a proactive fiscal policy and an accommodative monetary policy this year.

The PBOC has in recent months prioritized defending the yuan against the pressure for it to depreciate on anticipation of higher tariff rates, complicating its task to stimulate a faltering economy.

The strategy of defending the yuan carries risks for the economy, as a weaker yuan could help keep ******** exports competitively priced abroad, while a stronger currency makes imports more expensive at a time when consumer demand is already fragile.

Since the inauguration last month, U.S. President Donald Trump has imposed a 10% tariff on all imports from China, on top of existing tariffs of up to 25%.

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#China #benchmark #lending #rates #steady #rising #tariff #risks

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