China Keeps Lending Prime Rates Unchanged for 6th Month

The People’s Bank of China maintained its benchmark lending rates unchanged for the sixth consecutive month in February, as the world’s second-largest economy showed more signs of recovery from a pandemic slowdown.

The central bank kept the 1-year loan prime rate (LPR) at 3.65%, while the 5-year loan prime rate remained steady at 4.30%, broadly in line with expectations, as the PBOC boosted medium-term liquidity injections, rolling over maturing policy loans last week while maintaining the interest rate fixed.

Following the news, the offshore yuan traded at slightly higher levels, at 6.8736 against the U.S. dollar.

In general, markets anticipate shifts in lending benchmarks by watching the medium-term lending facility (MLF) rate first.

Some analysts believe that China’s rates will be cut following the country’s annual parliamentary assembly in March, when the government is expected to unveil important growth targets for the year.