SHANGHAI : China is set to keep benchmark lending rates unchanged for a seventh month in March, a Reuters survey showed, as early signs of a domestic economic recovery, combined with global market turmoil, leave Beijing disinclined to shift its monetary policy stance.
All 22 participants in a Reuters poll this week predicted no change to loan price rates (LPRs) on Monday. Such unanimity has been rare in previous surveys.
Evidence has grown that the world’s second-largest economy is recovering from COVID-19 restrictions. Goldman Sachs on Wednesday raised its forecast for gross domestic product (GDP) growth this year to 6 per cent from 5.5 per cent, based on the rapid reopening.
In the latest indication of growth, home prices gained momentum nationally in February, rising for a second month.
Turmoil in global financial markets, however, triggered by fears of a banking crisis after the collapse of the Silicon Valley Bank, and deepening problems at Credit Suisse, mean Chinese policymakers would prefer to avoid any change for now, analysts said.
“I don’t see any reason benchmark rates need to be adjusted this month,” a Shanghai-based trader who participated in the poll on condition of anonymity.
China’s central bank kept its medium-term lending facility rate (MLF) unchanged for March, making an adjustment even less likely for LPRs, which are loosely pegged to the MLF rate.
The one-year LPR stands at 3.65 per cent, while the five-year LPR is 4.30 per cent. China last cut both LPRs in August.
The LPRs – which are reference rates for bank loans – are calculated each month after 18 designated commercial banks submit quotes to the National Interbank Funding Center, a People’s Bank of China affiliate.
