The People’s Bank of China yesterday responded to the US Federal Reserve’s interest rate increase by nudging up a key policy rate on lending to commercial banks. It left the benchmark rate for borrowing by companies and the public unchanged.
China’s central bank said it was responding to market forces by raising the rate charged by its one-year lending facility by 0.05 percentage points to 3.25 percent. Rates paid on bank reserves rose by a similar margin.
“The change in interest rates is a result of market supply and demand, and at the same time is a normal market response to the Federal Reserve’s interest rate hike,” a central bank statement said.
There was no change in the rates for borrowing by companies and the public and for deposits.
Also yesterday, the Chinese National Bureau of Statistics said China’s industrial output slowed again last month, as authorities press on with their fight against smog by clamping down on polluting heavy industries.
Output at factories and workshops expanded 6.1 percent year-on-year, against 6.2 percent in October and in line with forecasts in a Bloomberg News survey.
In some northern cities, the government has forced steel factories and smelters to cut production, with some running at half capacity, in a drive to clean up the notoriously heavy winter smog.
Other enterprises have faced cuts in their natural gas supply as China lurches from supply issues after rapidly transitioning its population away from coal-fired power sources for heating this winter.
Last month’s retail sales figures ticked in the right direction for that goal.
Data from the Chinese statistics bureau showed growth increasing to 10.2 percent, up 0.2 percentage points from October, but short of Bloomberg forecasts of 10.3 percent, while fixed asset investment grew 7.2 percent year-on-year from January to last month, in line with expectations, but the fifth consecutive month that the reading has fallen.
Additional reporting by AFP
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