China Expected to Keep Benchmark Lending Rates Unchanged as Oil Prices Rise

China is set to maintain its benchmark lending rates unchanged amidst the global rise in oil prices, which are nearing $100 a barrel. The decision by China’s central bank to keep rates steady comes as a result of signs of economic stabilization and a weakening yuan, which has limited further monetary easing efforts for now.

Alongside China’s interest rate decision, Asian markets will also be focused on several key events. Japan will release its trade data for August, Taiwan will announce its export orders, South Korea will reveal producer price inflation figures, and New Zealand will publish its second-quarter current account balance.

However, the main event of the day will be the Federal Reserve’s policy meeting in the United States. The Fed is expected to keep interest rates unchanged at 5.25% to 5.50%, with markets pricing in a 30% likelihood of a quarter-point hike in November or a 40% chance in December.

Oil prices continue to surge, reaching close to $100 a barrel, while U.S. bond yields remain high. Both factors could potentially influence the Fed’s decision to raise rates again this year. As a result, global stocks and risk assets are feeling the pressure, with world stocks falling for a third consecutive day and Wall Street ending in the red.

Asian markets will have to wait until Thursday to react to the Federal Reserve’s announcement, leaving the direction for Wednesday to be influenced by local events. In addition, attention will be drawn to the 78th United Nations General Assembly, where investors can expect headlines from scheduled meetings between world leaders and bilateral discussions.

In summary, China is anticipated to keep its benchmark lending rates unchanged amidst the rise in oil prices. The Federal Reserve’s interest rate decision and global economic factors are also expected to impact Asian markets. Furthermore, the United Nations General Assembly will provide additional direction for investors.

– Benchmark lending rates: The interest rates at which banks lend money to their most creditworthy customers, typically used as reference rates for a country’s overall interest rates.
– Monetary easing: A policy implemented by central banks to stimulate economic growth by reducing interest rates and increasing the money supply.
– Bilaterals: Meetings or discussions between two parties or countries.

– Jamie McGeever, Reuters (September 19, 2018)