People’s Bank of China rate setting:
- 5-year Loan Prime Rate at 3.50% vs 3.50% expected and 3.50% last month also
- 1-year at 3% vs. 3% expected and 3% last month too
As noted earlier, aast month the Bank lowered LPRs for the first time since October, 1-year to 3.0%, from 3.1% and the 5-year to 3.5% from 3.6%, while it cut its 7 day reverse repo benchmark rate by 10bp to 1.4% earlier that month. LPRs are no longer as important as they once were. The People’s Bank of China (PBOC) shifted its primary monetary policy tool to the seven-day reverse repurchase agreement (reverse repo) rate. This transition began in mid-2024. This move aligns China’s monetary policy framework more closely with global standards, such as those of the U.S. Federal Reserve and the European Central Bank, which typically rely on a single short-term policy rate to guide market expectations and liquidity.
This article was written by Eamonn Sheridan at www.forexlive.com.