Chinese interest rates remain unchanged in May as expected

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Link Securities | The People’s Bank of China (PBoC) kept its benchmark interest rates unchanged in its June adjustment, in line with market expectations. Thus, its one-year lending rate (LPR), the benchmark for most business and household loans, remained at 3.45%. Meanwhile, the five-year rate, the benchmark for real estate mortgages, remained at 3.95%, following February’s 25 b.p. cut.

Both interest rates are at historic lows, in an environment of weak economic recovery that reinforces calls for more support measures by the Chinese government. Earlier this week, the PBoC held its medium-term interest rate at 2.5% for the tenth consecutive month, while withdrawing CNY 55 billion from the banking system to avoid excessive liquidity.

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