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PBOC Prefers To Hold

PBOC Prefers To Hold Mold Interest Rates. People Bank of China (PBOC) decided to maintain its monetary policy, namely by holding its benchmark interest rate on Monday (15/4/20024).

The PBOC said it maintained the lending interest rate at 2.50% for a one-year medium-term lending facility (MLF) worth 100 billion yuan (US$13.82 billion) to several financial institutions.

With MLF loans worth 170 billion yuan due to expire this month, the operation resulted in a net withdrawal of 70 billion yuan of fresh funds from the banking system. The central bank also injected 2 billion yuan through a seven-day reverse repo while keeping borrowing costs unchanged at 1.80%.

Fitch Ratings has just revised China’s long-term external debt outlook to negative from stable. One of the reasons for this revision is the increasing risk to the public financial prospects in the Bamboo Curtain country.

According to Fitch Ratings’ official statement on Wednesday (10/4/2024), increasing economic uncertainty and China’s efforts to change its growth model from one driven by the property market have led to a decrease in fiscal buffers from a rating perspective.

Fitch also expects that contingent liability risks may increase, as lower nominal growth will exacerbate the challenges of managing the economy’s high leverage. PBOC Prefers To Hold Mold Interest Rates.

Despite this, the actual rating of China’s defaulted issuers remains maintained at A+ level taking into account its large and diversified economy, still solid economic growth prospects compared to other countries, strength in global goods trade, strong external forces and currency status yuan reserves.

On the other hand, Fitch estimates that China’s economic growth will slow to 4.5% in 2024 from 5.2% last year. This projection is different from Citi and the International Monetary Fund (IMF) which revised China’s projections upwards.

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