SHANGHAI, Nov. 19 (Reuters) – China’s prime lending rate (LPR) – a benchmark rate set monthly by 18 banks – is expected to remain unchanged for a seventh consecutive month when it was set in November on Friday, according to a Reuters survey of of traders, analysts and economists have shown.

Many respondents said they did not expect any rate adjustments for the rest of the year, while expecting authorities to maintain accommodative conditions to help the Chinese economy recover from the turmoil. caused by the coronavirus pandemic.

In an instant Reuters poll, 31 out of 36 traders and analysts predicted no change in one-year or five-year LPRs. Four predicted an increase.

The one-year LPR is 3.85% and the five-year rate is 4.65%. The two were last cut in April, their second cut of the year.

Liu Ligang, chief economist for China at Citigroup in Hong Kong, saw little chance for the People’s Bank of China to cut rates and expects them to remain stable until 2021.

“China’s political stance this year was largely in response to the pandemic,” Liu said.

“The PBOC’s recent remarks were relatively hawkish, mentioning an exit from easing monetary policy. The chances of a drop in the RRR or a drop in rates are therefore relatively low this year, ”he said.

“We think the chances of a rate hike next year are also low. The PBOC is expected to gradually come out of easing and we expect the central bank to maintain the current rate level towards the end of next year, ”he added.

Senior PBOC officials said policy changes and a more flexible monetary policy will be considered as the economy recovers, while avoiding any rushed moves.

High expectations for the continuation of the LPR came as the PBOC earlier this week kept borrowing costs on its Medium Term Loan Facility (MLF) unchanged for the seventh consecutive month.

The MLF is one of the main tools of the PBOC in managing long-term liquidity in the banking system and serves as a guide for the LPR.

The 36 survey responses were collected from selected participants on a private messaging platform. (Reporting by Steven Bian, Hongwei Li and Andrew Galbraith, written by Winni Zhou; editing by Simon Cameron-Moore)


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