China Seen Holding Benchmark Rate Steady in Aug, but Weak Data Fans Rate Cut Talk

None expected changes to the five-year tenor — which influences the pricing of mortgages, an area where authorities are keeping a tighter grip to curb rising home prices.

The one-year LPR is currently at 3.85%, and the five-year rate is 4.65%.

Official data this week showed China’s factory output and retail sales growth slowed sharply in July as new COVID-19 outbreaks and floods disrupted business operations, and some analysts believe August readings could be worse.

The People’s Bank of China (PBOC) injected billions of yuan through medium-term loans into the financial system earlier this week, which many market participants interpreted as an effort to prop up activity, although the cost of such borrowing was left unchanged.

The interest rate on the medium-term lending facility (MLF), which serves as a guide for the LPR, has been unchanged for 16 straight months, though the central bank has plenty of other tools it could use to bring down borrowing costs. It cut banks’ reserve requirements (RRR) in July, and many market watchers see another such cut in coming months.

Policy insiders told Reuters earlier in August that China is poised to quicken spending on infrastructure projects while the central bank supports the economy in other ways.

However, some survey participants believe there is urgency to roll out more easing measures, such as a rate cut, to reduce the risk of a sharper economic slowdown in coming months.

Liu Li-Gang, chief China economist at Citi, said the central bank would likely offer some easing signals but be cautious about taking any actions in the remainder of the year.

“Speaking of monetary policy signals, followed by a broad-based reserve requirement ratio (RRR) cut, another interest rate cut could mean aggressive easing, which is not in line with central bank’s recent statement of maintaining prudent monetary policy,” Liu said.

“From the market’s perspective, recent economic data came in below expectations. But compared with the government’s annual GDP target of 6% or above, the economy remained in a normal functioning range. An annual 8% growth (rate) is way above the target. It’s a mismatch between expectations, and there’s no risks of (the recovery) derailing.”

Liu did not see a big chance of a cut to either the MLF rate or LPR this year.

The LPR is a lending reference rate set monthly by 18 banks.

All 32 responses in the survey were collected from selected participants on a private messaging platform.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Reuters fixed income team, Writing by Winni Zhou; Editing by Kim Coghill)

Source link

0 0 votes
Article Rating

Notifier de
0 Commentaires
Commentaires en ligne
Afficher tous les commentaires
Reset Password

Avertissement sur les risques :

Le trading peut vous exposer à des risques de pertes supérieures aux dépôts et ne convient qu’à une clientèle avisée ayant les moyens financiers de supporter un tel risque. Les CFD sont des instruments complexes et présentent un risque élevé de perte rapide en capital en raison de l’effet de levier. Entre 74 et 89% des comptes de clients de détail perdent de l’argent lors de la négociation de CFD. Vous devez vous assurer que vous comprenez comment les CFD fonctionnent et que vous pouvez vous permettre de prendre le risque élevé de perdre votre argent. Ce site n’est en aucun cas une offre de conseil en investissement ni une incitation quelconque à acheter ou vendre des instruments financiers. Trader le Forex et/ou les CFD’s implique un niveau de risque élevé, et peut ne pas être approprié car vous pouvez subir des pertes supérieures à votre dépôt. L’effet de levier peut être en votre défaveur.

Vous devez être conscient et avoir une compréhension complète de tous les risques associés au marché et au trading. Le site peut être amené à produire des commentaires d’ordre général, ce qui ne constitue pas des conseils en investissement et ne doit pas être interprété comme tel.

Veuillez recourir aux conseils d’un conseiller financier extérieur. Le site décline toute responsabilité pour les erreurs, inexactitudes ou omissions et ne garantit pas l’exactitude ou le caractère complet des informations, textes, graphiques, liens ou autres éléments contenus dans cette documentation. Toute information et toute mise à disposition sur le site ont un caractère privé.