In an unexpected move, China holds back on cutting key rate
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Shanghai was the hub of many international businesses and this week saw a lockdown in place in both parts. This is because municipal officials sought to stop an epidemic in China’s most severe Covid wave in over two years.
Hector Retamal | Afp | Getty Images
China’s central banking kept the key interest rate of its currency unchanged Friday, surprising many who expected more stimulus in Beijing as it struggles with Covid.
People’s Bank of China stated that it would keep the interest rate of its medium-term one-year loan at 2.85%.
This Asian powerhouse is currently facing the worst Covid pandemic since late 2019 when it locked down key cities, such as Shanghai.
Some analysts and economists predicted that the mass lockdowns would lead to a drop in GDP growth to 5.5%, below its target for the year.
“The People’s Bank of China (PBOC), declined the chance to reduce its policy rates.” It’s not surprising considering the economic downturn, and recent demands from China’s leadership to monetary support,” Julian EvansPritchard (senior China economist at Capital Economics) said.
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