The People’s Bank of China left its benchmark lending rates unchanged for the ninth consecutive month on Monday, in line with market expectations, as a weakening yuan and widening yield differentials with the United States constrained the scope for substantial monetary easing.
For both one and five year loans, China’s prime rate remained at 4.30% and 3.65% respectively.
After the initial post-COVID rally, a slew of data, including April indications last week, pointed to a slowing economy and raised expectations for additional softening measures.
However, some analysts now believe that the Chinese central bank could cut the amount of cash banks must hold aside as its next policy action in response to capital outflow risks that might further impact a dropping yuan.
