China kept its benchmark lending rates unchanged for the ninth month in May on Monday, matching market expectations, as a weakening yuan and widening yield differentials with the United States limited the scope for any substantial monetary easing.
over the past month or so, including April indicators last week, pointed to an economy losing momentum after the initial post-COVID bounce and lifted hopes of more easing measures.
In a Reuters poll of 26 market watchers conducted last week, 23 predicted no change to the rates for this month."Despite the April weakness, we do not expect policymakers to unleash major stimulus as the 5% GDP growth target is still well within reach and issues such as property risks and youth unemployment require a more targeted approach," economists at Goldman Sachs said in a note.
At the same time, the yield gap between China's benchmark 10-year government bonds and their U.S. counterparts is hovering at the widest level in two months. Economists at Capital Economics said last week the central bank's goal was to ensure that credit growth, which"This can probably be achieved without policy rate cuts, which we think the PBOC will try to avoid," they said.
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