It is reported that the People Bank of China will reduce the benchmark interest rates for one year deposits by 25 basis points and that for one-year lending by 31 basis points on Friday.
SteelHome perspective on this interest rate cut:
1) This move is conducive to lowering down financing and fixed assets investment cost, fueling property sales and further powering domestic steel products consumption in the medium term.
2) Chinese central bank persistence on reserve ratio stability indicated its cautiousness on monetary aggregates control and precautions on potentially inflationary pressure.
3) The main subjects who would obtain benefits from this interest cut would come to government-led fixed assets investment, especially central government.
4) The surprise move incarnated the severe macro economic situation and negative Q2 economic indicators in China for now, thus it is likely to send pessimistic sentiments into China steel market in near term.
| Deposit | Change | Lending | Change | |
| 21-02-2002 | 1.98% | -0.27% | 5.31% | -0.54% |
| 29-10-2004 | 2.25% | 0.27% | 5.58% | 0.27% |
| 28-04-2006 | 2.25% | 0.00% | 5.85% | 0.27% |
| 19-08-2006 | 2.52% | 0.27% | 6.12% | 0.27% |
| 18-03-2007 | 2.79% | 0.27% | 6.39% | 0.27% |
| 19-05-2007 | 3.06% | 0.27% | 6.57% | 0.18% |
| 21-07-2007 | 3.33% | 0.27% | 6.84% | 0.27% |
| 22-08-2007 | 3.60% | 0.27% | 7.02% | 0.18% |
| 16-09-2007 | 3.87% | 0.27% | 7.29% | 0.27% |
| 21-12-2007 | 4.14% | 0.27% | 7.47% | 0.18% |
| 16-09-2008 | 4.14% | 0.00% | 7.20% | -0.27% |
| 09-10-2008 | 3.87% | -0.27% | 6.93% | -0.27% |
| 30-10-2008 | 3.60% | -0.27% | 6.66% | -0.27% |
| 27-11-2008 | 2.52% | -1.08% | 5.58% | -1.08% |
| 23-12-2008 | 2.25% | -0.27% | 5.31% | -0.27% |
| 20-10-2010 | 2.50% | 0.25% | 5.56% | 0.25% |
| 26-12-2010 | 2.75% | 0.25% | 5.81% | 0.25% |
| 09-12-2011 | 3.00% | 0.25% | 6.06% | 0.25% |
| 06-04-2011 | 3.25% | 0.25% | 6.31% | 0.25% |
| 07-07-2011 | 3.50% | 0.25% | 6.56% | 0.25% |
| 08-06-2012 | 3.25% | -0.25% | 6.31% | -0.25% |
| 06-07-2012 | 3.00% | -0.25% | 6.00% | -0.31% |
Source - People's Bank of China
Source: www.steelhome.cn/en
China steel information centre and industry database
(www.steelguru.com)
