As I posted earlier:
0115 GMT, 2115 US Eastern time (Wednesday evening) will bring the People's Bank of China's Loan Prime Rate setting.
Earlier this week the MLF rate was left unchanged which is usually a good indication that the LPRs will be left untouched. A small cut to the 1-year rate wouldn't be too much of a surprise though. While the data has been improving there is scope for a boost via monetary policy.
Current LPRs:
- 3.65% for the one year
- most new and outstanding loans in China are based on the one-year LPR
- 4.30% for the five year
- most home mortgage rates are based on the five-year
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Preview thoughts via ING:
- We expect Chinese banks to leave the Loan Prime Rate on 1-year and 5-year loans unchanged today. This is because the PBOC has left the 7D reverse repo and 1-year medium-term lending facility policy rates unchanged. It is unlikely that the central bank will ease as retail sales rose 10.6%YoY in March. Unless data show a pause in the economic recovery, which is not our base case, the PBoC has little reason to cut policy rates. The central bank could stabilize market interest rates by changing liquidity in the money market via daily market operations. A RRR cut also seems to be quite unlikely as it would inject too much liquidity into the market during the recovery and could fuel inflation later.
