China’s central bank surprisingly does not cut rates

Passer-by in front of China’s central bank

Monetary watchers currently believe the recent measures are sufficient to help the economy.

(Photo: Reuters)

Beijing Despite the severe virus crisis, China has decided not to cut interest rates yet. The central bank left the one-year reference rate (LPR) at 4.05 percent on Friday. It had only lowered it from 4.15 percent in February to free up more money for lending and to provide companies with cheap loans that are part of the coronavirus prevention and control process. The majority of experts had now anticipated a further reduction.

According to analysts, the waiver suggests that monetary watchdogs currently believe recent measures are sufficient to help the economy counter the effects of the coronavirus epidemic. The central bank had recently lowered the reserve requirement for banks (RRR) to boost lending.

“But since the economy is unlikely to get back on track before next year, further monetary easing will be required,” said Julian Evans-Pritchard, China economist at Capital Economics.

More: ECB chief Lagarde: We will do everything we can to support the euro area.


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