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China’s central bank to announce interest rate policy


China’s central bank to announce interest rate policy

China will decide on its interest rates this Saturday.

During its address at the World Economic Forum early this week, China announced a 2023 growth of 5.2%. Although it surpassed its 5% objective for 2023, the Chinese economy has not fully bounced back from the pandemic downturn, commercial disputes, and global supply chain issues.

As such, expect the People’s Bank of China to announce their Loan Prime Rate this weekend to tackle economic challenges in the country. Since Monday, China has already added $138 billion in medium-term lending  (MRL) facility at a 1.8% interest rate to maintain liquidity.

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However, changes in their financial institutions are likely during 2024 to continue as a global technological innovation and energy transition leader. In the short term, the MRL rate is expected to reach 2.5%. The one-year loan prime rate (LPR) will likely average around 2.5%.  In the mid-term, a policy to bolster domestic demand to get China’s economy back on track is anticipated. Supporting weak economic links and collaborating closer with the private sector by maintaining lower interest rates will help stimulate investment consumption and demand in the growing middle class of the country. As such, cuts in rates to promote credit growth are foreseen during 2024.

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