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China seen keeping lending benchmark LPR steady for 10th straight month

Reuters2021-02-19

SHANGHAI, Feb 19 (Reuters) - China’s benchmark lending rate is set to stay unchanged for the 10th straight month at its February fixing on Saturday, a Reuters survey showed.

Thirty-one traders and analysts, or 88% of all 35 participants, in a snap Reuters poll conducted this week predicted no change in either the one-year Loan Prime Rate (LPR) or the five-year tenor.

Another three respondents expected an increase of 5 basis point to both tenors this month, while the other one predicted a marginal rate cut to the one-year LPR.

The one-year LPR was last at 3.85%, and the five-year rate stood at 4.65%.

Strong expectations for a steady LPR this month came after the People’s Bank of China (PBOC) rolled over the maturing medium-term lending facility (MLF) on Thursday, while keeping the interest rate unchanged for a 10th straight month.

The MLF, one of the PBOC’s main tools in managing longer-term liquidity in the banking system, serves as a guide for the LPR.

Spikes in some short-term money market interest rates ahead of the week-long Lunar New Year holiday prompted some speculation that a shift to a tighter monetary policy stance may be underway.

Economists at Morgan Stanley said they continued to expect a gradual and flexible pace of countercyclical tightening this year.

“However, a hike in policy rates appears unlikely in 2021,” they said in a note published earlier this month, adding the central bank still aimed to keep funding costs for companies stable while inflation dynamics would remain healthy.

Separately, Financial News, a publication owned by the PBOC, said on late Thursday that investors paying too much attention to the size of the central bank’s liquidity operations could lead to a misunderstanding of monetary policy.

The LPR is a lending reference rate set monthly by 18 banks.

All 35 responses in the survey were collected from selected participants on a private messaging platform. (Reporting by Reuters China fixed income team, Writing by Winni Zhou; Editing by Simon Cameron-Moore)

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Comment14

  • CheeMang
    ·2021-02-22
    Nice ? 
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  • JlI
    ·2021-02-21
    Thats right
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  • Stephen_Ong
    ·2021-02-21
    Nice
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  • GgWimp
    ·2021-02-21
    Gg
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  • Jimmy365
    ·2021-02-21
    Ok
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  • 璇瑤
    ·2021-02-20
    China can be a big markets too if... 
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  • TohKokMeng79
    ·2021-02-20
    More news on China site.
    Reply
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    • 璇瑤
      Yup.. Read more
      2021-02-20
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  • cutemiao
    ·2021-02-20
    Interesting, good information!!??
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  • Pls help to like this comment hehe thank you
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    • JPLee
      Like me back hehe thank you
      2021-02-20
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  • Jakielwj
    ·2021-02-19
    Hello bois like me and comment
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    • TianZi81
      Ok
      2021-02-20
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  • Dhhahs
    ·2021-02-19
    H
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    • Tbun
      win
      2021-02-21
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    • Dhhahs
      H
      2021-02-21
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    • TianZi81
      Done
      2021-02-20
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  • Yang88
    ·2021-02-19
    interesting
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  • Sorrie2u
    ·2021-02-19
    Commen plss
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    • Joker_Smile
      lai. same same on my post too.
      2021-02-19
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    • Sorrie2u
      pls
      2021-02-19
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  • Zarkness
    ·2021-02-19
    Increase in liquidity is good
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