23 Jul 2013
Flash: Removing China's lending rate floor a symbolic gesture - Nomura
FXstreet.com (Barcelona) - According to Zhiwei Zhang and Wendy Chen, Economist at Nomura, credit conditions in China are expected to tighten further in H2 while growth is projected to drop below 7% in 2014.
Furthermore, the Economists add that the recent measures taken by the People's Bank of China (PBoC) to remove the floor on the lending rate, in order to create fairer competition among lenders and create easier access to credit by individual borrowers, "will have a limited impact on effective lending rates, as the floor is not binding for most loans" Zhang and Chen said.
As a matter of fact, on their research note, the Economists underscore that "only 11% of total outstanding loans in March charged interest that was lower than the benchmark rate."
Furthermore, the Economists add that the recent measures taken by the People's Bank of China (PBoC) to remove the floor on the lending rate, in order to create fairer competition among lenders and create easier access to credit by individual borrowers, "will have a limited impact on effective lending rates, as the floor is not binding for most loans" Zhang and Chen said.
As a matter of fact, on their research note, the Economists underscore that "only 11% of total outstanding loans in March charged interest that was lower than the benchmark rate."