FILE PHOTO: A man wearing a mask walks past the headquarters of the People’s Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee
October 19, 2020
SHANGHAI (Reuters) – China’s benchmark lending rate is likely to remain steady for a sixth straight month at its October fixing on Tuesday, after the central bank left rates on its medium-term lending facility (MLF) loans unchanged last week, a Reuters survey showed.
Twenty-five out of 28 traders and analysts in a snap Reuters poll, or nearly 90%, predicted no change in either the one-year Loan Prime Rate (LPR) <CNYLPR1Y=CFXS> or the five-year tenor <CNYLPR5Y=CFXS>.
The one-year LPR is now 3.85% after two cuts this year, the five-year rate at 4.65%.
Many analysts and economists expect the rates will remain unchanged through the rest of the year, but the authorities will keep conditions accommodative to support recovery in the world’s second-largest economy from coronavirus disruption.
The expectations for the steady fixing this month came as the People’s Bank of China (PBOC) kept borrowing costs on the medium-term lending facility unchanged for the sixth month in a row last week.
The MLF is one of the PBOC’s main tools in managing longer-term liquidity in the banking system and serves as a guide for the LPR.
Official data on Monday showed that China’s economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth suggested persistent risks for one of the few drivers of global demand.
The LPR is a lending reference rate set monthly by 18 banks.
All 28 responses in the survey were collected from selected participants on a private messaging platform.
(Reporting by Hongwei Li, Steven Bian, Xiangming Hou and Andrew Galbraith; writing by Winni Zhou; editing by Larry King)
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