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China's central bank leaves key interest rates unchanged

The Chinese central bank saw no immediate need for action and left its key interest rates for one-year and five-year loans unchanged at 3.65% and 4.3% respectively. According to the Fed's regular economic report, the US economy has been relatively stable recently. The turbulences in the banking sector have so far not had any serious consequences for the real economy, according to the "Beige Book". 

Alessandro Fezzi, LGT
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The US central bank noted that in the period from the end of February to mid-April, economic activity remained stable and the growth outlook remained unchanged. Inflation, however, continued to be a burden. In addition, banks had tightened lending, which was a consequence of increased uncertainty. On a positive note, bottlenecks caused by problems in supply chains continued to ease. Overall, it is difficult to deduce from the economic report whether the Fed will pause on interest rates as early as May 3. 

There was no consistent trend on the New York Stock Exchange. The Dow Jones Industrial closed 0.23% lower at 33,897.01 points and the S&P 500 closed practically unchanged (-0.01%) at 4,154.52 points. On the Nasdaq, the indices also remained at the previous day's closing level. Shares of Netflix fell by around 3% after the streaming provider reported a lower-than-expected increase in user accounts and net profit was 18% lower. In addition, the outlook for the current quarter was mixed.

Asia-Pacific markets were mixed on Thursday. In Tokyo, the Nikkei 225 was trading 0.3% higher shortly before the close. The Japanese trade deficit reached a record level of 161.14 billion US dollars in the fiscal year ending in March. The Kospi in Seoul rose 0.6%. Stock markets in mainland China traded lower. The Shanghai Composite fell 0.7% and the Shenzhen Component fell 0.5%. In Hong Kong, the Hang Seng Index edged higher, reversing earlier gains. 

In Europe, the focus yesterday was on defensive and high-dividend sectors. In the UK, inflationary pressures fell slightly, but less than expected and remained at high levels. On an annual basis, consumer prices rose by 10.1% in March (consensus 9.8%) compared to an inflation rate of 10.4% in February. Inflation in the UK peaked in autumn 2022 at 11.1%. In view of the still very high inflation rate, also by international standards, the Bank of England is likely to be forced to take further interest rate steps. 

Corporate news in focus: Q1 figures from Schindler, Nokia and Volvo as well as Q1 sales data from Renault and Rentokil Initial. In the US: AT&T, American Express, Blackstone, Philip Morris International with Q1 figures.

Economic data in focus: In Europe, we expect producer prices from Germany for March (08:00 CET), business climate from France for April (08:45) and consumer confidence in the Eurozone at 16:00. From the US, we expect weekly initial jobless claims and the Philly Fed Index for April at 14:30. This will be followed at 16:00 by the leading indicator and existing home sales in March.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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