Chinese banks convened a meeting this month to discuss co-ordinating increases in deposit interest rates, a sign that Beijing is loosening its grip on funding costs to allow market forces greater sway.
China’s central bank has not adjusted benchmark deposit or loan rates since 2015, but the informal move by banks could result in pricier mortgages and corporate loans in line with Beijing’s efforts to discourage excessive credit growth.
In 2015, China’s central bank officially eliminated the cap on bank deposit rates that had held funding costs artificially low. But authorities have continued to use informal instructions — known as “window guidance” — to discourage lenders from raising rates too aggressively as they compete for customer funds.
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