Following the disproportionate reduction in the US key interest rate, the key monetary policy rate LPR in China remains at 3.35 percent. Japan’s central bank is also sticking to the current interest rate.
The Chinese central bank surprisingly left its key interest rates unchanged on Friday. The key rate for one-year loans (loan prime rate) remained at 3.35 percent, and the five-year LPR remained at 3.85 percent.
The key LPR rate is used to determine consumer credit and mortgage interest rates. It is based on proposals submitted to the central bank by 18 commercial banks. The majority of experts surveyed by Reuters this week had expected a reduction in interest rates.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences mortgage pricing. China surprised markets in July by cutting key short- and long-term interest rates, the first such sweeping move in nearly a year to bolster economic growth.
Japan’s central bank could step up
The Bank of Japan (BOJ) also left interest rates unchanged on Friday. At the same time, it maintained its assessment that the Japanese economy is still on track for a moderate recovery. The central bank left its key interest rate unchanged at 0.25 percent with a unanimous vote. Experts surveyed by the Reuters news agency had unanimously expected this.
However, most economists expect the Bank of Japan (BoJ) to follow up on interest rate hikes in March and July this year – in December. BOJ Governor Kazuo Ueda will hold a press conference at 3:30 p.m. local time (0630 GMT) to explain the decision. The BOJ ended its negative interest rates in March and raised the short-term key interest rate to 0.25 percent in July. (APA/Reuters)
Trump describes interest rate cut as a “political move”
The US Federal Reserve made a disproportionate interest rate cut at the beginning of the week. For the first time since the beginning of the decade, the US monetary authorities reduced the key rate by half a percentage point. But Federal Reserve Chairman Jerome Powell made it clear that this was not “the new pace” on the interest rate downward path.
Republican presidential candidate Donald Trump has described the Federal Reserve’s decision as a “political move.” “It’s really a political move. Most people thought it would be half that number, which probably would have been the right thing to do,” Trump said in an interview with the online portal Newsmax.
In August, Trump demanded that the US President have a say in the decisions of the Federal Reserve. The Chairman of the US Federal Reserve and the other six members of the Board of Governors are appointed by the President and must be confirmed by the Senate. The Fed enjoys extensive operational independence in its decisions. (APA/Reuters)
