The PBOC announced on Friday that it will remove the floor on commercial lending rates. At present there is a floor 30% below current benchmark lending interest rates. The move is a step towards greater interest rate liberalisation. However the cap on deposit rates remains in place for the time being.
According to the PBOC, the move will lower companies’ funding costs and boost financial institutions’ pricing capabilities. However, the move is not an outright easing of policy settings, direct impact on the economy will be relatively limited.
Read the full report: Economic Research
Commonwealth Bank