PBoC tells banks to keep deposit rates lower than new ceiling

The People’s Bank of China has called on commercial banks to not raise maximum deposit rate levels beyond those set in February despite having itself set a higher ceiling for interest rates on Sunday, The Wall Street Journal reported, citing two unnamed bankers. Central bank officials told the banks that those which failed to comply with the new instructions would face punishment. “The deposit rate cap shows that the central bank is actually more cautious than it appears in pushing ahead with interest rate liberalization,” said one of the bankers from a state-run lender, who added that similar behind-the-scenes controls are expected even after interest rates are fully liberalized.