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China expected to keep benchmark LPR unchanged for sixth month - Metro US

China expected to keep benchmark LPR unchanged for sixth month

Man wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing

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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