People's Bank of China Keeps Policy Rate LPR Unchanged Despite Economic Slowdown
The People's Bank of China, the central bank of China, has kept the policy interest rate, the Loan Prime Rate (LPR), unchanged despite concerns over economic slowdown.
On the 20th, the People's Bank of China announced on its website that the 1-year LPR would remain at 3.55% per annum and the 5-year LPR at 4.20% per annum, maintaining the previous rates. The LPR effectively serves as the benchmark interest rate in China.
The People's Bank of China has maintained the same rates for a month after lowering the 1-year and 5-year LPR by 0.1 percentage points each on the 20th of last month.
Through this rate freeze, the People's Bank of China expressed its intention to observe the effects of last month's LPR cut before taking further action, despite the slowdown in economic recovery. Some analysts suggest that the rate freeze was also aimed at preventing capital outflows in light of the recent weakening trend of the yuan.
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China is showing signs of economic slowdown, with its economic growth rate in the second quarter of this year recording 6.3%, lower than market expectations.
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