China is widely expected to leave its benchmark lending rates unchanged on Wednesday, a Reuters poll showed, as interest rate cuts a month ago squeeze banks’ profitability and the yuan comes under new pressure as Donald Trump returns to the White House.
Beijing has announced a series of stimulus steps since late September, ranging from monetary easing, fiscal measures and property market support, in an attempt to pull the economy out of recession and back towards the government’s growth target.
In October, Chinese lenders cut their benchmark lending rates by a larger-than-expected margin to revive economic activity.
But with Trump re-elected, some analysts say Beijing policymakers may now prefer to keep their preparations in check, and hold off on more aggressive moves until he takes office in January and reveals more evidence of his policy intentions.
The Loan Prime Rate (LPR), which is usually charged to a bank’s best customers, is calculated every month after 20 designated commercial banks submit proposed rates to the People’s Bank of China (PBOC).
In a Reuters poll of 28 market watchers conducted this week, all respondents expected interest rates on one- and five-year loans to remain steady.
“Loan rates were cut sharply in October, so it is unlikely that there will be another cut this month,” said a trader at a Chinese bank. “We may first wait and see the policy impact in the near term.”
As part of his pitch to boost American manufacturing during the recent election campaign, Trump said he would impose tariffs of 60% or more on goods from China. The proposed tariffs, as well as other policies such as tax cuts, are seen as inflationary and are likely to keep US interest rates relatively high in a blow to the currencies of trading partners.
The Chinese yuan has already lost about 1.8% against the dollar since the US election on November 5.
