Bankinter: The one-year rate, which is the benchmark for corporate loans, remained at 3.10%. The five-year rate, which is the benchmark for mortgage loans, remained at 3.60%. In October, commercial banks cut these rates by -25bp following the PBOC cut that was part of a stimulus plan to revitalise the economy approved at the end of September.
Market sentiment: This pause in the process of rate cuts by commercial banks was expected by the market after the PBOC pause. The reason for this pause in the PBOC is to avoid an excessive depreciation of the yuan in a context of increasing dollar strength. But this does not mean that this is the end of the monetary policy easing cycle in China, but simply a pause. The economy needs more stimulus due to deflationary risks, weak consumption, deteriorating corporate profitability and a real estate sector that has not yet stabilised. In addition, the potential for heavy tariffs by the US could negatively affect exports, resulting in additional downward pressure on the economy.
