China has kept the main interest rates for lending fixed, for the fifth consecutive month in March, in line with the market expectations, despite the decline in inflation without scratch, last month, for the first time in 13 months.
Beijing has proven the basic interest rate on loans for a year at 3.1% and the basic interest rate on loans for five years at 3.6%, according to Reuters.
Most of the new and entitled loans in China are based on the basic interest rate for one year, while the five -year interest rate affects the mortgage pricing.
In October 2024, Chinese banks reduced the benefits of lending with greater margins than expected to revive economic activity.
The rate of consumer price inflation in China has declined much more than expected, to drop below zero for the first time in 13 months, in reference to the continued deflationary pressures in the economy, according to Bloomberg.
Consumer prices
The National Bureau of Statistics announced, during the past month, that the consumer price index decreased by 0.7% compared to the previous year, and an increase of 0.5% in the previous month.
Even with the modification of the effect of the new lunar day’s holiday that came before the usual date, consumer inflation slowed to one of the weakest levels in months, according to the Goldman Sachs Group.
The low services prices, along with a rare negative reading of basic inflation, were among the symptoms of slowdown consumption.
The basic consumer price index in China, which excludes volatile goods such as food and energy, decreased for the first time since 2021 by 0.1%, which is the only time that the index has shrunk for more than 15 years. The factories’ prices continued for the twenty -ninth month.
China has set its goal of inflation at its lowest level in more than 20 years, and now aims to reduce consumer prices to about 2% by 2025, with a decline in its previous goal of 3%.
This is an indication that senior leaders are aware of the deflationary pressures that burden the second largest economy in the world, as the consumer inflation rate stabilized at only 0.2% during the past two years.
The urgent need for the government to revive the economy increased; In the annual parliamentary session, China announced the goal of an ambitious economic growth of about 5% for 2025, despite the risk of a trade war with the United States, and Beijing has developed plans to enhance financial stimulation and local consumption.
