金融英语阅读：Rate increase attracts savers
After the government surprised the nation with a modest interest rate hike Tuesday, a Bank of China branch in Beijing's Tuanjiehu saw a flurry of customers roll in looking to take advantage of the savings rate increase Wednesday.The central bank's quarter basis point interest up tick is not expected to negatively impact lenders, as the change doesn't affect checking accounts, where the majority of bank deposits are held.
The People's Bank of China adjusted prime rates Tuesday for the first time in nearly three years, two days ahead of the release of the September inflation indicator, the consumer price index (CPI).
The rate change comes as September inflation numbers are expected to surpass August's CPI of 3.5 percent, reflecting policymakers' determination to curb inflation and rising asset prices, according to Lu Zhengwei, senior economist with Industrial Bank.
Officials hope the move will ease public concerns over weakening purchasing power due to rising prices. Banks can now borrow from lower-rate deposits and lend at higher rates, said Cheng Jiaoyi, a banking sector analyst with Qilu Securities.
The People's Bank of China set a progressive rate rise ranging from 25 basis points to 60 basis points on one-year to five-year deposit rates, and a 25 basis points rise for one-year lending rate.
Also, the policy shift sets the minimum rates lenders can offer, but doesn't set a maximum rate cap, so banks have the flexibility to float lending rates to enlarge their net interest margins, Lu noted.
Wednesday, overall bank share prices went down slightly by 1.05 percent on average compared with Tuesday close on the Shanghai and Shenzhen stock exchanges.
The property sector, which accounts for about 10 percent of banks' lending, is foreseen to feel the greatest impact from the interest hikes, Cheng said.
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