China may keep lending benchmark stable as recovery continues on track – analyst


SHANGHAI/SINGAPORE (Reuters) – China is widely expected to hold firm to its lending benchmark in Thursday’s monthly fix, according to a Reuters poll. .

China’s economy grew faster than expected in the first quarter, making it less urgent for authorities to ease monetary policy to support the recovery, traders and economists said.

The Loan Prime Rate (LPR), which banks typically charge to their highest customers, is calculated monthly after 18 designated commercial banks submit their proposed rates to the People’s Bank of China (PBOC).

In a poll of 30 market watchers, 27 predicted no change in the 1-year LPR or the 5-year period.

The remaining three respondents forecast a reduction of only 5 basis points to either the 1-year or 5-year LPR.

Citi analysts said: “Given that the (data) numbers in the first quarter were better than expected and the base for the next few quarters is lower than last year, the ‘about 5.0%’ growth target for this year will be easily achieved. It is possible,” he said. client note.

The stable LPR consensus is that the central bank will roll over the medium-term policy loan that matured on Monday with a fifth-month cash offer, keeping interest rates unchanged as widely expected and boosting liquidity to the economy. It also came from the increased support.

Interest rates on medium-term line of credit (MLF) loans serve as a guide for LPR.

“We do not expect a 1-year MLF or 1-year LPR cut in the short term, as China is still in the recovery phase and the US Federal Reserve has not yet completed its rate hike cycle,” Lin Li said. there are,” he said. Head of global market research for Asia at MUFG Bank.

The Fed is widely expected to raise rates again in May, but China’s easing has further widened the yield gap between the world’s two largest economies, weakened the yuan and threatened capital outflows. there is a possibility.

(Reporting by Stephen Bian and Tom Westbrook; Writing by Winnie Chow; Editing by Christopher Cushing)

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