SHANGHAI, Sept 18 (Reuters) – China is widely expected to leave benchmark lending rates steady for a 16th consecutive month in September, a Reuters survey showed, as policymakers remain cautious about delivering fresh stimulus amid a hawkish shift among major global central banks.
The loan prime rate (LPR), normally charged to banks’ most creditworthy clients, is calculated each month after 20 designated commercial banks submit proposed rates to the People’s Bank of China (PBOC).
In a Reuters survey of 21 market participants conducted this week, all respondents predicted that the one-year and five-year LPRs would remain unchanged at 3.00% and 3.50%, respectively, at the upcoming review on Sunday.
The overwhelming consensus for steady LPR settings comes against the backdrop of some major economies shifting toward tighter monetary policy to contain inflation pressures.
“We expect PBOC could hold LPRs unchanged again in September amid a hawkish turn of global central banks,” Citi analysts said in a note.
The yield premium on benchmark 10-year U.S. Treasuries over Chinese government bonds hovered near the highest level on record after the Federal Reserve raised interest rates this week, even as the yuan continued its gradual appreciation against the dollar.
Comments from central bank governor Pan Gongsheng this week reinforced steady rate expectations. Pan said China’s slower loan growth was becoming the new normal as shrinking property and local government sectors sapped credit demand faster than emerging industries can fill the gap.
China’s new bank loans returned to positive territory in August but fell well short of analysts’ forecasts after a record contraction in July, as weak demand from the household and corporate sectors continue to weigh on credit growth.
(Reporting by Shanghai NewsroomEditing by Shri Navaratnam)
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