PBoC: China’s rate reform is no reform at all

September 23, 2019

The People's Bank of China has thrown out a four-year-old lending rate and introduced two new references, but onshore bankers have doubts about what the central bank's change will achieve.

By Rebecca Feng

china-POBC-780 — A man rides a bicycle past the People's Bank of China (PBOC) headquarters in Beijing, China, on Friday, June 7, 2019. China's central bank governor said there's "tremendous" room to adjust monetary policy if the trade war deepens, joining counterparts in Europe and the U.S. in displaying readiness to act to support the economy. Photographer: Qilai Shen/Bloomberg via Getty Images

The PBoC’s lending rate reform needs to go further, say bankers

The People’s Bank of China (PBoC) has reformed the loan prime rate (LPR), turning what was previously a sideshow in the domestic monetary system into the main reference rate for loans. The new LPR will be updated monthly and will be based on indicative quotes from 18 banks’ loans to their prime clients, with both the highest and lowest figures removed.

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