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China Holds Benchmark Lending Rates As Expected
(RTTNews) - The People's Bank of China left its interest rates unchanged for the sixth successive session on Monday.
The central bank retained its one-year loan prime rate at 3.10 percent. Likewise, the five-year LPR, the benchmark for mortgage rates, was 3.60 percent, unchanged from the previous month. The decision matched expectations.
The bank had reduced its both LPRs by 25 basis points each in October 2024.
The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.
The LPR is not seen moving without a cut to the 7-day reverse repo rate first, ING economists said in a note.
Although there is a strong case for easing, currency stabilization considerations may prompt the PBoC to wait until the US Federal Reserve cuts borrowing costs, economists noted.
Driven by the fiscal support measures, the second-largest economy grew by stronger-than-expected 5.4 percent in the first quarter. However, growth is forecast to soften going forward on higher US tariffs on Chinese goods and the central bank is widely expected to ease its monetary policy stance.
Beijing aims to achieve growth of "around 5 percent" this year. The International Monetary Fund forecast China to expand 4.6 percent in 2025.
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