The Banco Popular de China building (PBOC) in Beijing, China, on Thursday, December 15, 2022.
Bloomberg | Getty images
China is expected to maintain its prime rates without changes on Monday, since Macro Fuertes data allow their central bank room to concentrate on stabilizing Yuan in the midst of commercial tensions with the United States
The decision of the Popular Bank of China to maintain the preferential rate of loans at 1 year at 3.1% and the LPR at 5 years at 3.6% occurs when China reported better expected economic data this month.
The GDP of the first quarter of the country increased 5.4% year after year, while retail sales and industrial production numbers also exceed the expectations of economists surveyed by Reuters.
The 1 -year LPR influences corporate and domestic loans in China, while the 5 -year LPR serves as a point of reference for mortgage rates. The PBOC has maintained the stable LPRs since October last year.
The PBOC did not reduce the LPR since the Macro data of China have not yet shown signs of fabric, said Zhiwei Zhang, president and chief economist of the Chinese coverage fund management firm, Pinpoint Asset Management. “They will cut the interest rate when hard data softens.”
China’s economic data for the month of April, which will reflect the impact of the rates of the president of the United States, Donald Trump, will begin arriving since April 30, with official figures from the purchasing managers index.
Commercial data will be published on May 9 and inflation numbers on May 10, according to LSE.
After the announcement, the Yuan in Chinese land Appreciation 0.20% to 7,2848 against the dollar, while Yuan at high sea strengthened 0.22% to 7,2846 against the Back Greenback.
The CSI 300 of Continental China increased 0.36%.
PBOC’s decision was in line with a survey of Reuters economists, with 87% who expected the bank to keep the stable rates.
The Dutch bank also predicted in a note last week that the PBOC would probably maintain rates, with the analysts Lynn Song and Min Joo Kang pointing out that it was unlikely that the LPR changes without first reduced the 7 -day repo rate.
The 7 -day repo rate is currently 1.5%, and was last reduced at 20 basic points in September.
However, Ing also said that “low inflation and strong winds against winds against in the middle of the tariff threats that grow provide a strong argument for flexibility. But currency stabilization considerations can make China’s Popular Bank wait until the federal United States cuts loans.”
Ryota Abe, an economist of Sumitomo Mitsui Banking Corporation, told CNBC that PBOC is unlikely that “use the currency to counteract economic difficulties because it could lead to a mass capital exit.”
The United States has imposed tariffs of up to 245% in Chinese imports, while China has slapped 125% of the drafts of US imports.
Although GDP growth figures were encouraging, consumer prices in the second largest economy in the world remained in deflation territory, with the reading of the CPI in March that shows that prices fell 0.1% year after year.
The prices of the producer fell 2.5% in March, marking the 29th consecutive month in Deflation and seeing the highest contract since November 2024.