China is expected to leave its benchmark lending rates unchanged for a 12th consecutive month in May, a Reuters survey showed, as ample interbank cash supplies reduced the need to cut rates despite weak economic and lending activities.
The seven-day reverse repo rate, which serves as the anchor for loan prime rate (LPR) pricing, would remain unchanged, suggesting the People's Bank of China has little incentive to lower lending rates in the near term.
All 24 market participants polled predicted the one-year LPR would stay at 3.00% and the five-year LPR at 3.50%.
The average rate of overnight repurchase transactions in the interbank market has hovered around 1.2% over the past month, the lowest since August 2023.
The PBOC reiterated a "moderately loose" policy stance, but unlike its fourth-quarter report, the latest quarterly policy implementation report made no mention of cuts to reserve requirements or interest rates.
The U.S.-Israeli war on Iran has driven up commodity prices, pushing imported inflation risks onto the PBOC's radar, though markets widely believe this is not enough to shift the accommodative policy stance.
