SHANGHAI, Dec 22 (Reuters) – China left benchmark loan prime rates (LPRs) unchanged for the seventh consecutive month in December on Monday, matching market expectations.<\/p>\n
WHY IT’S IMPORTANT<\/p>\n
The steady LPR fixings in December suggested that the authorities are not in a rush to deliver fresh monetary easing measures as the world’s second largest economy appears on track to hit Beijing’s growth target for the year.<\/p>\n
Sign up here.<\/a><\/p>\n Moreover, the central bank’s adoption<\/a> of “cross-cyclical” policy adjustments, which aim to smooth out the impact of economic cycles, and record-low profit margins at lenders may give policymakers room to delay stimulus until next year, some market watchers said.BY THE NUMBERS<\/p>\n The one-year LPR was kept at 3.00%, while the five-year LPR was unchanged at 3.50%.<\/p>\n In a Reuters survey<\/a> of 25 market participants conducted last week, all participants predicted no change to either of the two rates.CONTEXTAt this month’s the annual Central Economic Work Conference (CEWC), Chinese leaders pledged<\/a>to maintain a “proactive” fiscal policy next year that would stimulate both consumption and investment to maintain high economic growth, which analysts expect Beijing to target at roughly 5%.China’s economy<\/a> stalled in November, with factory output and retail sales growth slowing as a lingering property crisis hit consumer and business sentiment. New bank loans<\/a> also rose less than expected, weighed down by a sharp slowdown in household borrowing.KEY QUOTES<\/p>\n ** BARCLAYS<\/p>\n “The CEWC reiterated ‘growth stabilisation and reasonable price increases as the main considerations for monetary policy’ … adding the need to ‘flexibly and efficiently’ use various policy tools such as reserve requirement ratio (RRR) and interest rate cuts.<\/p>\n “We continue to see a 10-basis-point cut in the policy rate, though with somewhat reduced probability, and a 50bp RRR cut in the first quarter of 2026 to facilitate the front-loading of government bond issuance.”<\/p>\n ** NOMURA<\/p>\n “We expect Beijing to continue ramping up fiscal measures to arrest the ongoing slowdown … We also expect one 10bp rate cut and a 50bp RRR cut in the second quarter of 2026.”<\/p>\n Reporting by Shanghai Newsroom; Editing by Christopher Cushing and Shri Navaratnam<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n