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MNI POLICY: PBOC Keeps Oct Loan Prime Rate Unchanged

PBOC Held Key Rate For Sixth Straight Month

MNI (Singapore)
BEIJING (MNI)

China's central bank maintained its key loan rate unchanged Tuesday for the sixth month in a row as it aims to normalize monetary policy and keep any broad easing in reserve to deal with future economic challenges.

The October Loan Prime Rate, the benchmark to set companies' cost of borrowing, remains at 3.85% for the one-year maturity and at 4.65% for the five-year maturity.

The move was expected by policy advisers and market analysts as the PBOC held its Medium-Term Lending Facility rate at 2.95% on Oct.15. The LPR is linked to the one-year MLF, which is viewed as being closer to market rates.

MNI reported Monday that the PBOC is likely to keep its policy rates stable for the rest of the year or even the first half of next as the economy continues to recover.

So far this year, the PBOC has cut 30 bps off the one-year LPR and 15bps off the five-year. In April, following a 6.8% contraction in Q1 GDP, the PBOC cut the one-year LPR by 20 bps and the five-year LPR by 10 bps, the biggest cuts since the LPR mechanism reform in August.

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