PBOC Loan Prime Rates (LPR) stay unchanged at immediately's price setting, as anticipated

The unchanged rates were widely expected after the MLF was unchanged earlier this week:

• People’s Bank of China set MLF rate at 2.5% (expected 2.5%, prior 2.5%)

The hold today is despite subdued economic data and widespread expectations that the Bank will be forced to cut rates at some stage. A critical constraint on the PBOC cutting rates is the wide yield gap with the US and the pressure on the yuan this is entailing.

The PBOC is easing back on its dampening on the yuan weakness though:

• The PBOC USD/CNY fixing is coming up soon – looks like the Bank is lightening up

LPR rates remain:

• 3.45% for the one year
• 3.95% for the five year

This article was written by Eamonn Sheridan at www.forexlive.com.