Sunday, May 26

Contrary to Expectations, Chinese Central Bank Does Not Tinker With Interest Rates

The Chinese central bank PBOC has not cut its interest rates against expectations. However, the economy in China is under pressure due to a flare-up of the corona epidemic.

 

Beijing is reducing the cash reserves that banks must hold. The measure will come into effect from April 25, the central bank announced on Friday. Lenders will therefore be able to provide cheaper loans to support the economy.

The PBOC maintained the yield on one-year policy bonds at 2.85 percent on Friday. That was against analysts’ expectations, who had expected a cut in interest rates.

Growth expectations for China have already been revised downwards significantly this year. Economists are currently forecasting 5 percent growth, below the government’s target of 5.5 percent.

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