Economic and event calendar in Asia 20 July 2026 – PBOC rate setting day, unchanged expected
Japan is closed for a holiday today.
South Korea is open, returning from a long weekend after the holiday on Firday. The Kospi is expected to come under pressure again.
There is not a lot on the data calendar expected to move financial marekts areound too much upon release.
The People's Bank of China is set to announce its Loan Prime Rate today, with markets broadly expecting the one-year and five-year tenors to stay unchanged for a fourteenth straight month. The one-year rate, the benchmark for most household and corporate lending, has sat at 3.0% since May 2025, while the five-year rate, which underpins mortgage pricing, has remained at 3.5% over the same stretch.
Although the LPR still formally sets borrowing costs across the real economy, its place in the PBOC's toolkit has shifted. The central bank now leans on the seven-day reverse repo rate as its main policy lever, a change Governor Pan Gongsheng flagged in mid-2024, with the LPR and the Medium-term Lending Facility relegated to supporting roles.
The reverse repo rate is what the PBOC charges when it temporarily buys securities from commercial banks to add short-term liquidity, agreeing to sell them back a week later. Because it can be adjusted daily, it gives policymakers sharper, faster control over funding conditions than the LPR, which is fixed monthly from submissions by 18 designated banks, submissions themselves shaped by what those banks pay for PBOC liquidity.
That rate has held at 1.4% since a 10 basis point cut on 9 May 2025, part of a wider easing round that also lowered the LPRs and trimmed the reserve requirement ratio and housing fund loan rates. Officials appear reluctant to cut further, wary of squeezing bank margins or pressuring the yuan.
The hold reflects a balancing act. China's economy expanded 5% in the first quarter of 2026, at the top of its target range, easing pressure to loosen policy, while Middle East tensions have driven oil prices higher, importing inflation. In Q2 GDP growth cooled to 4.3%, weakest pace in three and a half years.
This article was written by Eamonn Sheridan at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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