INSUBCONTINENT EXCLUSIVE:
China on Monday unexpectedly kept unchanged its new benchmark lending rate, suggesting Beijing is keen to avoid overly loosening monetary
policy for fear it may push up already-high debt levels across the economy.
The one-year Loan Prime Rate (LPR) remained at 4.20 per cent,
steady from the previous monthly fixing
The five-year LPR was fixed at 4.85 per cent, unchanged from September.
A Reuters poll last week had forecast the rate would be cut again
Benchmark 10-year treasury futures for December delivery CFTZ9, the most-traded contract, were barely moved after the data release.
A
separate Reuters poll of 83 analysts showed that the central bank is expected to slash the one-year LPR to 4.00 per cent by the end of 2019,
down by 20 basis point from its current level.
The decision to keep the LPR steady came just days after China reported its third-quarter
gross domestic product (GDP) growth cooling to near 30-year low.
Economists and China observers say a recent bath of weak data showing a
long Sino-US trade dispute was also one of the key factors fueling the easing expectations
US President Donald Trump has outlined the first phase of a deal to end a trade war and suspended a threatened tariff hike, though officials
on both sides said much more work needed to be done.
All the same, some policy insiders have said the room for the government to step up
stimulus measures could be limited by its worries about rising debt risks and possible property bubbles.
Data earlier on Monday showed new
home prices in China grew at a steady pace in September, with fewer cities reporting price gains, giving the authorities some breathing room
as they refrain from over-stimulating the property sector.
Beijing has leaned more heavily on fiscal stimulus to address the current
The one-year MLF rate, last cut in February 2016, now stands at 3.3 per cent.
The PBOC unexpectedly injected 200 billion yuan ($28.29
billion) through MLF loans last week while keeping the lending rates unchanged.
