According to a Reuters report, the People’s Bank of China (PBOC) maintained the one-year loan prime rate (LPR) at 3.00%, while the five-year LPR, commonly used as a benchmark for mortgage lending, was left unchanged at 3.50%.
The decision was widely anticipated by markets. A Reuters survey of 20 market participants showed unanimous expectations that both benchmark lending rates would remain steady this month.
The move reflects the central bank’s preference to preserve policy stability amid sufficient liquidity conditions in the banking system. Ample interbank liquidity and the tone of the PBOC’s latest quarterly policy report suggested authorities were not under immediate pressure to lower borrowing costs further.
China’s benchmark lending rates are closely tied to the seven-day reverse repo rate, which serves as the anchor for LPR pricing. That key short-term policy rate has also remained unchanged throughout the year, reinforcing expectations of a steady monetary policy stance.
However, the decision comes at a time when the Chinese economy continues to face multiple challenges. Economic growth lost momentum in April, with industrial production slowing and retail sales falling to their weakest levels in more than three years.
The slowdown has been attributed partly to rising energy costs linked to the Iran conflict and persistently weak domestic demand, both of which have weighed on business activity and consumer confidence in the world’s second-largest economy.
While policymakers have so far refrained from additional rate cuts, investors will continue to monitor upcoming economic data for signs of whether Beijing may eventually need to introduce fresh stimulus measures to support growth.
