China Effectively Holds Benchmark Interest Rate Steady Despite Sharp Economic Slowdown

[Image source=Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Despite the sharp economic slowdown, the People's Bank of China (PBOC) has kept the Loan Prime Rate (LPR), which functions as the benchmark interest rate, unchanged for 18 consecutive months.

On the 20th, the PBOC announced that the 1-year and 5-year LPR for October were recorded at 3.85% and 4.65%, respectively, the same as the previous month.

The PBOC has maintained a freeze on the rates for 18 consecutive months since April last year. The third-quarter economic growth rate announced on the 18th was 4.9% year-on-year, falling short of market expectations, which drew attention to the possibility of an interest rate cut.

At the G30 meeting held via video conference on the 17th, PBOC Governor Yi Gang expressed confidence that "China can achieve growth in the 8% range this year."

As Governor Yi emphasized the possibility of achieving economic growth in the 8% range but did not specifically mention measures such as reserve requirement ratio cuts for economic stimulus, the market evaluated that the likelihood of a reserve requirement ratio cut, initially expected once within the year, has significantly decreased.

This content was produced with the assistance of AI translation services.