As markets had anticipated, China’s central bank, PBOC, kept its lending benchmark rate steady following its decision to hold borrowing costs of medium-term loans unchanged earlier in December. On Friday, the PBOC announced that the one-year loan prime rate (LPR) was fixed at 4.15%, same as in November, while the five-year LPR also remained steady at 4.80%.
The PBOC Governor Yi Gang had previously hinted at the central bank’s interest to hold monetary policy steady as China’s economy continued to exhibit reasonable signs of growth while inflation remained mild. Yi has also remarked recently that the Chinese central bank is not keen on QE even as other leading central banks’ monetary policies close in on zero interest rates in the face of global economic slowdown.
China’s government has also expressed interest in lowering borrowing costs to encourage growth among small businesses in a bid to boost the economy. Earlier this year in August, the PBOC had decided to loosely peg its LPR to medium-term lending facility rate (MLF), which remains steady at 3.25% presently.