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- China keeps its 1-year loan prime rate unchanged at 3.85%
China keeps its 1-year loan prime rate unchanged at 3.85%
China keeps its 1-year loan prime rate unchanged at 3.85%, as expected and also keeps its 5-year loan prime rate unchanged at 4.65%, as expected. There has been no market reaction.
About the rate decision
If the PBoC is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the CNY. Likewise, if the PBoC has a dovish view on the Chinese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.
USD/CNY outlook
Analysts at Danske Bank see strength in the CNY in the near term but during 2022 they expect CNY to weaken.
''a) We look for the trade surplus to come down on the back of the US consumers eventually buying fewer goods from China and b) rate increases from the Fed amid moderate easing measures by PBoC reinforces the divergence in policy rates.''
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