ICYMI – China’s benchmark lending rates were held steady: 1 yr LPR @ 3.45% 5 yr @ 3.95%

This may have got lost in the mix:

• China sets 1 and 5 year LPR rates unchanged, as expected
• one-year loan prime rate was unchanged at 3.45%
• the five-year rate was unchanged at 3.95%

All as expected.

There are some thoughts, well founded, that the People’s Bank of China is still likely to ease monetary policy further

• more liquidity will be need for China’s banks to purchase government bonds, including the issuance of ultralong special Treasury bonds that started last Friday – these bonds are raising cash for economy-building purposes (stimulus)

On Friday we did have a rate cut from the PBoC:

• PBOC to lower interest rates on housing fund loans by 25 bps

• aimed at addressing China’s prolonged property-sector downturn

Other effort will involve local governments buy back unsold homes, lowering down payments for would-be home buyers, and removing the floor on mortgage rates that banks offer clients.

This article was written by Eamonn Sheridan at www.forexlive.com.