Bankinter | Commercial banks have kept one-year and five-year rates unchanged for the seventh consecutive month at 3.0%, in line with consensus expectations. These rates are used as a benchmark for short-term corporate loans. Five-year rates remain at 3.50%, also in line with estimates. These five-year rates are the benchmark for mortgage loans. The last time cuts were made was in May.
Analysis team’s view: The deterioration of the economy in a context of low inflation calls for greater monetary easing by the central bank to support activity. In line with this, a further rate cut of 10 bps by the PBOC is expected at its next meeting in January. Another similar cut could take place in the first half of 2026. This could be accompanied by a 50 bps reduction in the reserve ratio for banks in 2026.
