Breakingviews - China’s rate reform inches along the market path

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On Breakingviews – China’s rate reform inches along the market path, says cbeddor

A customer counts Chinese Yuan notes at a market in Beijing, August 12, 2015. China shocked global markets on Tuesday by devaluing its currency after a run of poor economic data, a move it billed as a free-market reform but which some experts suspect could be the beginning of a longer-term slide in the exchange rate. REUTERS/Jason Lee

The People’s Bank of China has in recent months seemed frustrated: despite efforts to nudge down what institutions like Bank of Communications and China Merchants Bank pay for funds, average loan rates declined only modestly. Part of the problem seemed to be that lenders continued to use an old benchmark lending rate to price loans – a measure unchanged at 4.35% since 2015 – despite efforts several years ago to move away from it.

 

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