China keeps benchmark loan interest rate unchanged

The People’s Bank of China (PBOC) left its benchmark lending rate unchanged this month. The one-year lending rate was held at 3.45 percent, matching economists’ estimates in a Bloomberg survey. The five-year interest rate, the benchmark for mortgages, was also held at 4.2 percent as forecast, according to data from the People’s Bank of China. Last week, the PBOC refrained from cutting the interest rate on its one-year policy loans. “Banks are not ready to cut rates in January,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. He also described the deterioration in banks’ net interest margins as a “big concern.” The pressures suggest lenders may need more time to absorb the impact of lower borrowing rates and reduce their funding costs.