China Central Bank keeps interest rates unchanged, defying expectations, in a sign of continued economic stimulus:
The Chinese central bank maintained a key interest rate in light of concerns about yuan fluctuations
and the remote possibility of Fed easing, which limits the space available for policymakers to support the economy.
This move to maintain key interest rates is considered a disappointment to the market, which expected an interest rate cut this month.
Content
People’s Central Bank of China
People’s Central Bank of China
The China Central Bank presented a view that the stimulus to the Chinese economy is continuing,
as the bank kept interest rates unchanged at around 2.5%, in violation of economists’ expectations that the Chinese bank would reduce interest rates.
Borrowing program
The borrowing program followed by the People’s Central Bank of China called the medium-term borrowing facilities,
is going through the facilitative stage and supports the movement of Chinese economic activity,
and experts expected that the bank would reduce interest for the first time since August.
The medium-term facilities and borrowing program, through which the Bank pumped 995 billion yuan,
equivalent to $139 billion, to banks to help meet the demand for financing requests.
Real estate sector recovery
Through statements by the Governor of the People’s Bank of China (Pan Gongsheng)
at the annual meeting of the International Monetary Fund,
which was held in Marrakesh, he stated that the real estate sector has shown signs of recovery,
especially after the reduction of mortgage rules.
He also stated that the risks of the Chinese government’s domestic debt are structural and can be controlled.
Without running into problems that harm the economy.
Chinese inflation declines
It is noteworthy that the decline in Chinese inflation and its approaching deflation is a challenge to the Chinese central bank,
which is stimulating economic activity and reducing interest to provide borrowing facilities.
In return, the Chinese authorities have avoided pumping a large stimulus package to support and strengthen the economy.
The Chinese Central Bank Governor also stated that the country’s financial sector is still strong and largely under control,
and China will impose strict control on new borrowing through local government financing tools.
Ban also hinted that the problems related to local government debts will be under control,
with the strength of the more developed eastern provinces that will provide
strong support to the government in resolving any debt-related problems.
He added that the central and western provinces will face problems
and the debts must be restructured to solve these obstacles on their own.
China Central Bank keeps interest rates unchanged