The PBOC announced it would raise the benchmark interest rate on RMB deposits and loans effective from March 18, 2007. The one-year benchmark deposit and lending rates were raised by 0.27 percentage points, the former up to 2.79 percent from 2.52 percent and the latter up to 6.39 percent from 6.12 percent. The benchmark interest rates on deposits and loans in other maturities were adjusted accordingly.
The hikes in the benchmark interest rates on RMB loans and deposits are conducive to guiding the appropriate growth of investment and credit, maintaining a generally stable price level and a sound financial system, optimizing the economic structure and balancing economic development so as to promote the sound and rapid growth of the economy.
In the first quarter, with the exception of the short-term lending rates of financial institutions that declined slightly, other medium- and long-term lending rates maintained a momentum of a steady rise. In particular, the weighted average lending rate of within 1 year (including 1 year) loans, 1-3 year (including 3 year) loans, 3-5 year (including 5 year) loans, and above 5 year loans was 6.86 percent, 7.04 percent, 6.79 percent, and 6.65 percent respectively, down 0.04 percentage points and up 0.03, 0.1, and 0.13 percentage points respectively from the previous quarter. The weighted average interest rate of 1 year RMB loans of commercial banks was 6.51 percent, 1.02 times the benchmark rate and down 0.07 percentage points from the previous quarter.
Inter-bank RMB deposit rates of financial institutions declined slightly. In particular, the share of the outstanding balance of inter-bank demand deposits took up 91.7 percent, and the weighted average interest rate was 1.38 percent, down 0.03 percentage points from the previous quarter; the share of the changes in time deposits took up 8.3 percent, and the weighted average interest rate was 2.29 percent, down 0.27 percentage points over the previous quarter.
The interest rates of negotiable RMB deposits (above 30 million yuan in one deposit) increased slightly. In March, the weighted average interest rate of negotiable deposits with a maturity of 61 months stood at 4.2 percent, up 0.03 percentage points from the beginning of the year; the weighted average interest rate of negotiable deposits with a maturity of 37 months was 4.47 percent, up 0.28 percentage points from the beginning of the year.