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China leaves benchmark lending rates unchanged in September

Photo taken on Aug 17, 2023 shows US dollars and Chinese yuan in Fuyang city, East China’s Anhui province.
Nurphoto | Nurphoto | Getty Images

China’s banks kept their benchmark loan rates unchanged for September, after the slowdown in the world’s second-largest economy showed signs of stabilization following recent policy support.

The People’s Bank of China kept its one-year loan prime rate — the peg for most household and corporate loans in China — unchanged at 3.45%. The five-year benchmark loan rate — the peg for most mortgages — was held at 4.2%, according to a statement Wednesday from the People’s Bank of China.

Wednesday’s announcement is aligned with economists’ expectations for September after the PBOC kept its medium-term policy rate steady last Friday, following a second cut in the reserve requirement ratio requirements this year for all banks announced last Thursday.

China’s August retail sales and industrial production data released Friday beat expectations.

They corroborated with other data points released in the last three weeks — from inflation rates and trade volumes to the purchasing managers index, typically seen as leading indicators — that also pointed to nascent signs of improvement in the economy.

In August, China trimmed its one-year benchmark lending rate by 10 basis points in a second reduction in three months, while unexpectedly keeping its five-year benchmark lending rate unchanged.

China’s loan prime rate is calculated each month from the proposed rates the People’s Bank of China receives from 18 designated commercial banks.

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