Mainland China - Interest rates and inflation

by Eduardo Petazze
Last Updated: August 25, 2015
Interest rates remain strongly positive on industrial prices
With effect from August 26, 2015, the People's Bank of China (PBC) decided to cut the RMB deposit reserve ratio (RRR), combined with further reduction in the
benchmark interest rate by 25 basis points, placing the one-year deposits at 1.75% per annum and the one-year loan interest rate at 4.60%, in order to
encourage consumption and investment.
Announcements made since the end of 2014 to date fail to establish a Quantitative Easing (QE) program, so effectiveness in terms of encouraging consumption
and investment will be limited
The Central Bank of China has reduced by 25 basis points its benchmark interest rates. China's price level is still running low, so the real interest rate is higher
than the historical average
The following table shows the main rates benchmark interest.
People's Bank of China RMB benchmark deposit and lending interest rates
06 Apr 11 07 Jul 11 08 Jun 12 06 Jul 12 22 Nov 14 01 Mar 15 11 May 15 28 Jun 15

Adjusted rates, %
Deposits
(A) Demand deposits
0.50
(B) Time deposits

Three months
2.85
Half of the year
3.05
One year
3.25
Two years
4.15
Three years
4.75
Five years
5.25
Lending
Six months
5.85
One year
6.31
One to three years
6.40
Three to five years
6.65
More than five years
6.80
Individual housing provident fund loans
Five years (including five years)
4.20
More than five years
4.70
Latest data

26 Aug 15

change

0.50

0.40

0.35

0.35

0.35

0.35

0.35

0.35

0.00

3.10
3.30
3.50
4.40
5.00
5.50

2.85
3.05
3.25
4.10
4.65
5.10

2.60
2.80
3.00
3.75
4.25
4.75

2.35
2.55
2.75
3.35
4.00

2.10
2.30
2.50
3.10
3.75

1.85
2.05
2.25
2.85
3.50

1.60
1.80
2.00
2.60
3.25

1.35
1.55
1.75
2.35
3.00

-0.25
-0.25
-0.25
-0.25
-0.25

6.10
6.56
6.65
6.90
7.05

5.85
6.31
6.40
6.65
6.80

5.60
6.00
6.15
6.40
6.55

5.60
5.60
5.60
6.00
6.15

5.35
5.35
5.35
5.75
5.90

5.10
5.10
5.10
5.50
5.65

4.85
4.85
4.85
5.25
5.40

4.60
4.60
4.60
5.00
5.15

-0.25
-0.25
-0.25
-0.25
-0.25

4.45
4.90

4.20
4.70

4.00
4.50

3.75
4.25

3.50
4.00

3.25
3.75

3.00
3.50

2.75
3.25

-0.25
-0.25

Note:
From March 1, 2015 the upper limit of the floating range for deposit interest rates was raised from 1.2 to 1.3 times the benchmark level.
Since the middle of the 1st. quarter of 2015 the Standing Lending Facility Operations (SLF) was widespread throughout the country, to improve the
liquidity provision channels to small and medium-sized financial institutions
On August 26, 2015, the PBC lowered the RMB deposit reserve requirement ratio (RRR) of all financial institutions by 0.5 percentage points, from
18.5%, and additional reductions for rural, micro and small enterprises, financial leasing and auto finance companies, to encourage it to play a good role
in the expansion of consumption
The following table shows the interest rates actually agree financial institutions in the interbank market and the evolution of purchase prices of industrial
producers.
In June 2015, the monthly weighted average interbank lending rate stood at 1.44%, up 0.02 percentage points from the previous month but down 1.41
percentage points from the same period last year. The monthly weighted average interest rate on bond pledged repo was 1.41%, up 0.11 percentage points from
the previous month but down 1.48 percentage points from the same period last year.
Link: Financial Statistics, H1 2015
Interbank Maket
Lending
Pledged Repo (*)
100 Million
Yuan and % Volume 1Volume
Volume 1Volume
Int. Rate
Int. Rate
Int. Rate
Int. Rate
Day
7-Day
Day
7-Day
2010
244,862
1.69 24,269
2.31
676,983
1.69 120,619
2.29
2011
273,200
3.17 42,401
4.02
728,667
3.17 157,023
4.10
2012
402,814
2.70 41,934
3.54 1,109,323
2.73 172,165
3.48
2013
289,636
3.01 44,024
4.17 1,201,733
3.28 196,621
4.32
2014
294,981
2.71 61,059
3.73 1,669,080
2.73 300,413
3.62

Purchaser Price Indices 2010=100

Industrial Producers (#)
Index

YoY

100.00
9.57%
109.13
9.13%
107.10
-1.86%
104.97
-2.00%
102.69
-2.17%
(#) From January 2011 the purchasing price
(*) RMB bond pledge-style repo business means a short-term RMB financing transaction with bonds as pledge index for raw materials, fuel and power
changed to the purchasing price index for
of rights, and trading amount is calculated by certain discount rate of the pledged bonds.
industrial producers
Interbank Maket
Purchaser Price Indices 2010=100
Lending
Pledged Repo (*)
Industrial Producers (#)
100 Million
Yuan and % Volume 1Volume
Volume 1Volume
Int. Rate
Int. Rate
Int. Rate
Int. Rate
Index
YoY
MoM
Day
7-Day
Day
7-Day
2012.01
15,741
4.21
3,305
4.55
48,422
4.41 10,295
4.45
108.19
2.01%
-0.31%
2012.02
27,771
3.22
3,543
4.06
72,380
3.33 17,716
4.16
108.33
0.97%
0.13%
2012.03
42,524
2.47
4,191
3.20
105,577
2.48 17,411
3.19
108.44
0.10%
0.10%
2012.04
37,186
3.18
2,986
3.86
91,594
3.17 13,320
3.85
108.47
-0.83%
0.03%
2012.05
50,007
2.13
2,276
2.98
122,484
2.12 12,068
2.94
108.15
-1.60%
-0.30%
2012.06
36,646
2.65
3,573
3.26
107,780
2.70 17,399
3.23
107.31
-2.53%
-0.77%
2012.07
42,053
2.68
3,840
3.52
103,900
2.69 17,990
3.49
106.45
-3.40%
-0.80%
2012.08
34,303
2.72
3,631
3.54
100,953
2.73 15,740
3.48
105.91
-4.09%
-0.51%
2012.09
30,994
2.79
3,538
3.54
90,382
2.87 10,886
3.42
106.02
-4.10%
0.10%
2012.10
22,345
2.73
3,658
3.17
77,801
2.69 14,025
3.17
106.14
-3.31%
0.11%
2012.11
32,078
2.41
3,502
3.26
96,692
2.40 13,214
3.19
105.94
-2.81%
-0.19%
2012.12
31,167
2.36
3,891
3.50
91,360
2.35 12,102
3.34
105.88
-2.44%
-0.06%
2013.01
33,896
2.13
3,047
3.27
115,470
2.09 12,420
3.09
106.17
-1.87%
0.27%
2013.02
23,010
2.59
3,102
3.44
78,500
2.68
9,366
3.46
106.32
-1.85%
0.15%
2013.03
30,720
2.31
4,302
3.22
109,238
2.29 15,329
3.15
106.24
-2.02%
-0.08%
2013.04
37,911
2.38
3,160
3.37
119,262
2.37 15,178
3.35
105.57
-2.67%
-0.63%
2013.05
38,622
2.80
3,953
3.71
118,167
2.87 15,101
3.65
104.92
-2.98%
-0.62%
2013.06
11,324
6.43
3,125
6.98
86,198
6.72 20,223
7.02
104.46
-2.66%
-0.44%
2013.07
18,775
3.34
3,759
4.10
93,484
3.36 18,285
4.18
104.07
-2.23%
-0.37%
2013.08
19,592
3.23
3,911
4.10
96,834
3.23 17,372
4.07
104.20
-1.62%
0.12%
2013.09
22,371
3.22
3,892
3.87
89,685
3.17 13,421
3.76
104.36
-1.56%
0.16%
2013.10
16,880
3.62
3,311
4.39
83,391
3.63 16,272
4.35
104.46
-1.59%
0.09%
2013.11
20,190
3.88
4,623
4.53
108,396
3.92 19,986
4.52
104.40
-1.45%
-0.05%
2013.12
16,345
3.71
3,839
5.17
103,108
3.84 23,668
5.26
104.40
-1.40%
-0.00%
2014.01
16,783
3.36
3,864
4.84
83,561
3.41 17,244
4.71
104.33
-1.73%
-0.07%
2014.02
12,863
2.49
3,036
4.40
76,900
2.59 11,263
4.30
104.05
-2.14%
-0.26%
2014.03
26,694
2.30
3,079
3.47
130,716
2.25 17,239
3.39
103.56
-2.53%
-0.47%
2014.04
24,816
2.47
4,190
3.62
134,817
2.46 19,795
3.58
103.15
-2.30%
-0.40%
2014.05
34,823
2.44
3,316
3.31
150,891
2.41 16,070
3.23
103.04
-1.79%
-0.11%
2014.06
31,107
2.72
4,171
3.45
152,398
2.70 24,116
3.40
102.91
-1.48%
-0.12%
2014.07
26,053
3.23
5,104
3.98
152,221
3.23 32,401
3.83
102.92
-1.11%
0.01%
2014.08
19,470
2.97
6,185
3.61
144,248
2.95 30,644
3.48
102.78
-1.36%
-0.14%
2014.09
27,646
2.81
6,762
3.41
161,429
2.78 25,842
3.27
102.37
-1.91%
-0.39%
2014.10
30,502
2.52
6,456
3.18
167,028
2.51 29,220
3.08
101.80
-2.54%
-0.56%
2014.11
24,463
2.59
7,456
3.33
155,200
2.57 36,855
3.24
101.08
-3.19%
-0.71%
2014.12
19,761
2.97
7,440
4.46
159,671
3.02 39,724
4.31
100.25
-3.98%
-0.82%
2015.01
19,544
2.81
5,736
4.11
164,935
2.78 36,426
3.99
98.92
-5.18%
-1.32%
2015.02
13,448
3.07
4,569
4.73
109,735
3.05 30,336
4.65
97.92
-5.89%
-1.01%
2015.03
27,839
3.37
6,294
4.74
197,047
3.33 35,688
4.49
97.64
-5.71%
-0.29%
2015.04
34,246
2.26
6,334
3.20
241,346
2.23 30,044
2.94
97.46
-5.51%
-0.19%
2015.05
49,143
1.24
7,053
2.35
307,682
1.19 29,354
2.12
97.42
-5.46%
-0.05%
2015.06
97.19
-5.57%
-0.24%
2015.07
96.62
-6.12%
-0.58%
(#) From January 2011 the purchasing price
(*) RMB bond pledge-style repo business means a short-term RMB financing transaction with bonds as pledge index for raw materials, fuel and power
of rights, and trading amount is calculated by certain discount rate of the pledged bonds.
changed to the purchasing price index for
industrial producers
The above table is not regularly updated.
It is understood that the measures announced by the Central Bank of China do not amount to a program of Quantitative Easing (QE), which are not intended to
reduce the current deflationary process and its effectiveness in terms of encouraging consumption and investment will be limited .