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WHY
IT'S IMPORTANT
The steady monthly LPR fixings underscore that Beijing's
monetary easing efforts continued to be limited by narrowing
interest rate margins and a weakening currency, despite a flurry
of recent data showing more support is needed to shore up an
uneven economic recovery.
BY THE NUMBERS
The one-year loan prime rate (LPR) was kept at 3.45%, while the
five-year LPR was unchanged at 3.95%.
In a Reuters survey of 30 market participants conducted this
week, 21, or 70% of all respondents, expected both rates to stay
unchanged.
China's new home prices fell at the fastest pace in more than
9-1/2 years in May, official data showed on Monday, with the
property sector in a depressed state despite government efforts
to rein in oversupply and support debt-laden developers.
New bank lending in China rebounded far less than expected in
May and some key money gauges hit record lows, suggesting the
world's second-largest economy is still struggling to pick up
the recovery pace.
CONTEXT
Most new and outstanding loans in China are based on the
one-year LPR, while the five-year rate influences the pricing of
mortgages.
The five-year LPR was lowered by a decent 25-basis-point in
February to support the housing market.
Financial News, a central bank-backed newspaper, said in a
commentary this week that China still has room to lower interest
rates, but its ability to adjust monetary policy faces internal
and external constraints.
(Reporting by Winni Zhou and Tom Westbrook; Editing by Kim
Coghill and Shri Navaratnam)
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