China’s key interest rate to remain unchanged until 2024, Economists expect

China may keep basic interest rates unchanged until early next year before it cuts in order to support the economy, according to “Bloomberg.”

However, other forms of monetary policy facilitation are still pending before the end of 2023, such as the reduction of shorter-term interest rates or the banks’ mandatory reserve ratio.

In the latest Bloomberg economist survey, participants expected China’s medium-term lending facility interest rate to continue for one year at 2.5% until the end of this year, compared with a previous average of 5 basis point reductions.

Instead, no reduction in basic interest rates is likely to occur until the first quarter of next year. 12 economically surveyed people expected the People’s Bank of China to reduce its one-year base loan rate by 5 basis points or more.

In a paper released this week, Duncan Righley and Kelvin Lam, two economists specializing in China at Pantheon Macroeconomics, wrote that “monetary policy plays a secondary and fiscal role in supporting recovery.”

The results of the survey indicate that China’s monetary policymakers have completed a major rate cut this year.