China's new lending benchmark set to be lowered marginally for third month: Reuters poll
Reuters
Published Oct 18, 2019 02:03AM ET
China's new lending benchmark set to be lowered marginally for third month: Reuters poll
SHANGHAI (Reuters) - China is expected to cut its newly introduced benchmark lending rate for the third straight month, a Reuters poll conducted this week showed, as policymakers continue to lower borrowing cost in an economy growing at the slowest pace in almost three decades.
Forty-eight respondents, or 71% of all participants including traders and analysts, predicted a reduction in the Loan Prime Rate (LPR) in monthly fixing on Monday.
Another 20 respondents forecast no change in the interest rate.
Among those who forecast a reduction in the LPR, over 70% of them predicted a no more than 5-basis-point cut in the one-year LPR and tipped the 5-year rate to be unchanged. A lower LPR could translate to lower borrowing costs for companies and consumers in the real economy.
"I think LPR may trend down further gradually to reflect the narrowing credit spread," Tommy Xie, head of Greater China research at OCBC Bank in Singapore said.
One-year LPR was set at 4.20% in September, down 5 bps from the previous rate at 4.25%. The 5-year LPR was unchanged at 4.85% last month.
A batch of recent data underlined broad economic weakness, boosting prospects for more stimulus from Beijing as policymakers try to prevent a sharper downturn.
China's economy grew at the weakest pace in nearly three decades in the third quarter, official data showed on Friday, due to a costly trade war with the United States and weak factory production.
The LPR is a lending reference rate set monthly by 18 banks. The People's Bank of China (PBOC) revamped the mechanism to price LPR in August, loosely pegging it to the rate on the central bank's medium-term lending facility (MLF).
China's central bank unexpectedly extended 200 billion yuan ($28.24 billion) worth of loans through MLF on Wednesday while keeping the lending rate unchanged at 3.3%.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.