China kept its benchmark lending rate for corporate and household loans unchanged at its December fixing on Monday, as expected, although improving economic fundamentals have raised speculation about a rate hike next year, reported the South China Morning Post.
The one-year loan prime rate (LPR) was kept unchanged at 3.85%, while the five-year LPR remained at 4.65%, confirmed the People’s Bank of China (PBOC). For the year, the one-year LPR was down a total 30 basis points of rate cuts, and the five-year rate was cut by 15 basis points of two cuts in 2020, said the SCMP.
“Commercial banks left the loan prime rate on hold. But with China’s leadership eyeing a gradual withdrawal of policy support, we think the PBOC will start to hike its policy rates next year,” said Julian Evans-Pritchard, senior China economist at Capital Economics.