China has set a 5-year loan prime rate at 4.75% vs 4.75% a month earlier.
Key notes
- China sets 1-year loan prime rate at 4.05% vs 4.05% a month earlier.
- China sets 5-year loan prime rate at 4.75% vs 4.75% a month earlier.
The hold was a surprise for markets. Reuters reported Thursday, citing a survey of traders and analysts, that the benchmark lending rate is expected to be cut. Central banks such as Australia’s Reserve Bank of Australia, the Bank of England, Bank of Canada and Reserve Bank fo New Zealand as well as the US Federal Reserve, have cut interest rates in recent days as authorities worldwide race to combat the economic impact of the coronavirus outbreak.
The Europan Central Bank has so far been resultant to cut but has applied alternative measures also to battle the downturn pertaining to COVID-19 with markets seeing wild moves in recent days as investors continue to weigh the disease’s potential economic impact.
Meanwhile, CNY opened trade at 7.1100 per dollar vs last close at 7.1119. Also, stocks in Asia Pacific rose in morning trade as investors await the release of China’s benchmark lending rate. In Australia, the S&P/ASX 200 rose 3.02% as almost all the sectors advanced, with the heavily-weighted financial subindex up more than 5%.
Description of the PBoC Interest Rate Decision
The PBoC Interest Rate Decision is announced by the People´s Bank of China. If the PBoC is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the CNY. Likewise, if the PBoC has a dovish view on the Chinese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.
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