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China’s benchmark lending rates were kept unchanged, as signaled by unchanged policy rates earlier this week, suggesting that Beijing is comfortable with the current pace of the country’s economic recovery led by consumption.
The one-year loan prime rate was held steady at 3.65% while the five-year LPR was unchanged at 4.3%, the People’s Bank of China said Thursday.
The LPRs are calculated monthly based on the interest rates that 18 designated commercial banks charge their best clients.
The steady rates were widely expected after the central bank kept the one-year medium-term lending facility unchanged on Monday.
Despite unchanged policy rates, the central bank offered 170 billion yuan of funds to banks through its Monday MLF operations, which resulted in a 20 billion yuan net injection in April, marking the fifth straight month for the central bank to take such actions.
The People’s Bank of China reduced the reserve requirement ratio for most banks by 0.25 percentage points last month, freeing up an estimated 500 billion yuan in the financial system.
Boosted by the central bank’s efforts to pump more long-term liquidity into the economy, China’s M2, the broadest measure of money supply, rose 12.7% from a year earlier in March, higher than the 12.6% forecast of economists surveyed by The Wall Street Journal.
China’s gross domestic product grew more than expected in the first quarter, which analysts say has made it less urgent for the central bank to further ease monetary policy to shore up the economy.
“China’s economy is stabilizing and rebounding, inflation remains moderate, and positive changes are emerging in the real estate market,” People’s Bank of China Governor Yi Gang said last week. He said he expects China to achieve around 5% economic growth this year
