Borrowing costs will get lower for companies in China starting Tuesday through a
key interest rate reform brought out by the People’s Bank of China, the central bank, to maintain ec乐动娱乐唯一正规官网419
onomic momentum amid the continuing trade friction with the United States.
乐动娱乐唯一正规官网419女神会所Analysts say the interest rate reform will lower financing costs for small a
nd private companies and encourage investment in the manufacturing sector.
The PBOC unveiled the policy over the weekend, saying it would introduce a new reference rate, the loan prime rate－the pr乐动娱乐唯一正规官网419
ice of loans banks offer their best clients－for setting the prices of business and household loans. The earlier re
乐动娱乐唯一正规官网419ference rate, the one-year benchmark lending rate, will be replaced in the future.
The announcement is seen as China’s most significant market-based interest rate reform for over a decade, experts said.乐动娱乐唯一正规官网419女神会所
The PBOC said in a statement that, starting Tuesday, 18 qualified commer
cial banks, including State-owned banks, city and rural commercial banks and foreign banks, will report their lend
乐动娱乐唯一正规官网419ing reference rate every month. Analysts expect the first loan prime rate will be much lower than the current 4.35 per
cent one-year benchmark lending rate, which has been unchanged since August 2015.
The statement said commercial banks will be allo乐动娱乐唯一正规官网419
wed to float the lending rates up by certain percentage points above the medium-ter
乐动娱乐唯一正规官网419女神会所m lending facility rate of the central bank. The medium-term lending rate is the cost that commercial banks sho
uld pay for borrowing from the central bank, and it was set at 3.3 percent on Thursday.
Sheng Songcheng, a central bank adviser and former head of the PBOC’s
statistics department, said the reform will help keep lending rates lower.
Moreover, the changes will enable the PBOC to effectively influence Chin乐动娱乐唯一正规官网419女神会所
a’s entire interest rate system by selling or buying financial instruments on the open
market, much like how Western central banks implement monetary policy, Sheng said.