[Preview of the Weekly] New Year Rate Cut Possibilities Emerge, But How Significant Will They Be? (AI Translation)
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- Chinese state-owned banks led a third round of deposit rate cuts in 2023, followed by joint-stock banks, marking the fourth adjustment since the market-driven reform of deposit rates in April 2022. The cuts across various terms aim to prepare for potential reductions in policy interest rates and loan prime rates (LPR), amidst discussions on the appropriate scale of monetary easing to support economic demand.
- There is debate over the extent of interest rate cuts needed to stimulate demand and support the economy. Some argue for significant monetary policy easing, including rate cuts and increased liquidity, while others call for a combination of policies beyond monetary measures, such as pro-consumption fiscal policies, debt resolution efforts, and reforms to spur private investment.
- Concerns about maintaining bank profitability margins are highlighted due to their role in supporting economic growth and preparing for potential credit risks. Additionally, there is discussion about balancing internal and external factors in monetary policy decisions, particularly considering exchange rate pressures from divergent U.S. and Chinese interest rate paths over the past two years.
文｜财新周刊 范浅蝉 刘冉 王力为 王石玉
By Caixin Weekly's Fan Qianchan, Liu Ran, Wang Liwei, Wang Shiyu
2023年岁末，国有大行再度带头下调多品种、多期限存款挂牌利率，股份制银行紧随其后。这是商业银行年内第三次集中下调存款利率，也是2022年4月存款利率市场化调整机制建立以来的第四次。
At the end of 2023, major state-owned banks once again took the lead in reducing the listed deposit rates for various types and terms, with joint-stock banks quickly following suit. This marks the third collective reduction of deposit rates by commercial banks within the year and the fourth since the establishment of a market-based adjustment mechanism for deposit rates in April 2022.
2023年12月22日，中、农、工、建、交五家国有大行及招商银行同步行动，将三个月、六个月、一年期存款挂牌利率分别下调10个基点（BP）至1.15%、1.35%、1.45%，两年期下调20BP至1.65%，三年期、五年期则下调25BP至1.95%、2.00%；一天/七天通知存款、协定存款利率分别下调20BP，调整后的利率分别为0.25%/0.80%、0.70%。
On December 22, 2023, China's five major state-owned banks—Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB), and Bank of Communications (BoCom)—along with China Merchants Bank, took synchronized action to cut the listed interest rates for deposits. The rates for three-month, six-month, and one-year deposits were reduced by 10 basis points (bps) to 1.15%, 1.35%, and 1.45% respectively; the two-year term saw a reduction of 20 bps to 1.65%; while the rates for three-year and five-year terms were cut by 25 bps to 1.95% and 2.00% respectively. Additionally, the interest rates for one-day/seven-day notice deposits and negotiated deposits were each lowered by 20 bps, with adjusted rates at 0.25%/0.80% and 0.70%.
次日，邮储银行按相同降幅开始执行新的挂牌利率，调整后除了六个月、一年期定期存款利率相对略高（分别为1.36%、1.48%），其他均与上述对应品种和期限的利率持平。
The following day, Postal Savings Bank of China implemented the new benchmark interest rates with the same reduction. After the adjustment, except for the slightly higher six-month and one-year fixed deposit rates (at 1.36% and 1.48%, respectively), all other corresponding products and terms were aligned with the aforementioned rates.
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