China leaves loan rates steady for 17th consecutive month
TLT•China kept its one-year loan prime rate at 3.00% and its five-year rate at 3.50% in October, extending the unchanged streak to 17 months. The decision matched expectations among all 22 participants in a market survey.
1. Rates unchanged
China kept its benchmark lending rates unchanged for the 17th straight month in October. The one-year loan prime rate remained at 3.00%, while the five-year rate stayed at 3.50%.
2. Policy framework reform
China's central bank is considering switching its main policy rate to the overnight reverse repurchase rate to improve monetary policy transmission. Governor Pan Gongsheng said the bank would issue guidance on reforming loan pricing benchmarks, with some financially strong companies able to choose between the overnight rate and the loan prime rate for floating-rate loans.
3. Economic context
China's economy grew 4.5% year on year in the third quarter, topping forecasts. Huatai Securities said the gradual shift toward asset-side pricing aims to avoid a one-off shock to the existing pricing system.
