People’s Bank of China keeps interest rate on loans unchanged for one year

People’s Bank of China kept the one-year loan interest rate unchanged in accordance with expectations.

According to the bank’s decision today, Friday, the Chinese central bank decided to keep the interest rate on one-year medium-term lending facilities worth 387 billion yuan ($53.8 billion) unchanged at 2.5%.

The bank withdrew 94 billion yuan from the banking system, in a move aimed at avoiding excessive liquidity. The decision of the People’s Bank of China will frustrate investors and economists who expected more stimulus from the government to achieve the economic growth target for the current year of 5%.

The Chinese Central Bank stated last week that there is room to reduce banks’ mandatory reserve requirements further, pledging to support consumer prices moderately through monetary policy tools.