{"id":442804,"date":"2025-09-22T07:53:17","date_gmt":"2025-09-22T07:53:17","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/442804\/"},"modified":"2025-09-22T07:53:17","modified_gmt":"2025-09-22T07:53:17","slug":"china-leaves-benchmark-lending-rates-unchanged-as-expected-despite-fed-rate-cut","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/442804\/","title":{"rendered":"China leaves benchmark lending rates unchanged as expected, despite Fed rate cut"},"content":{"rendered":"

BEIJING, CHINA – OCTOBER 12: The People’s Bank of China (PBOC) building is pictured on October 12, 2020 in Beijing, China. <\/p>\n

Vcg | Visual China Group | Getty Images<\/p>\n

China kept its benchmark lending rates unchanged for the fourth straight month on Monday despite the U.S. Federal Reserve’s interest rate cut last week.<\/p>\n

The People’s Bank of China kept the one-year loan prime rate unchanged at 3.0% while the five-year rate remained at 3.5%, according to a statement<\/a>. The one-year rate influences most new and outstanding loans, while the five-year benchmark affects mortgages.<\/p>\n

The central bank last trimmed the key lending rates by 10 basis points in May<\/a> as part of Beijing’s efforts to shore up its economy.<\/p>\n

The PBOC last Thursday kept the seven-day reverse repo rate, which serves as the main policy rate, unchanged, following the Fed’s 25-basis-point cut.<\/p>\n

The benchmark lending rates \u2014 normally charged to banks’ best clients \u2014 are calculated monthly based on designated commercial banks’ proposed rates submitted to the PBOC.<\/p>\n

The decision Monday came in line with economists’ expectations that Chinese authorities would hold off major stimulus measures amid a recent stock market rally, even as a string of economic data underscored signs of fatigue in the economy.<\/p>\n

The benchmark CSI 300 index opened higher on Monday before edging down 0.24%. The offshore yuan strengthened slightly to 7.1161 against the U.S. dollar.<\/p>\n

China’s economic slowdown deteriorated in August<\/a> with a raft of key indicators missing expectations. Retail sales slowed to 3.4% in August as consumption remained weak, while industrial output growth eased to 5.2%, marking its weakest level since August last year.<\/p>\n

In another sign of sluggish domestic demand, China’s consumer prices fell more than expected last month<\/a> while deflation in wholesale prices persisted for nearly three years.<\/p>\n

The country’s export growth slowed to 4.4% in August, marking their lowest growth rate since February, as the impact of frontloading shipments waned and the U.S. trade policy targeting transshipment weighed on exports to third countries.<\/p>\n

The growth momentum significantly weakened in the third quarter as China’s real estate slump worsened, Beijing’s fiscal stimulus faded, and the crackdown on excess capacity curbed industrial output, said a team of Barclays economists, who noted that “almost all housing indicators deteriorated further” in August.<\/p>\n

\"'Nervous'<\/p>\n

Economists largely expect Chinese policymakers to roll out marginal monetary easing later this year to ensure the world’s second-largest economy hits the government’s annual growth target of around 5%.<\/p>\n

“Beijing’s focus has shifted from risk management to growth stimulation, moving from tolerating deflation to reflating the economy,” said Hong Hao, managing partner and CIO at Lotus Asset Management.<\/p>\n

“China has reached a point where it must stop inefficient, debt-fueled asset accumulation and begin reducing unproductive investments,” said Hao, expecting further policy stimulus in the coming months.<\/p>\n

Barclays forecasts China’s real GDP to grow 4.5% in 2025, citing a sharper-than-expected slowdown,” even as “incremental policy support” is likely later this year.<\/p>\n

The bank expects the PBOC to cut the seven-day reverse repo rate and loan prime rate by 10-basis points in the fourth quarter, along with a a 50-basis-point reduction in the reserve requirement ratio, which sets out how much cash banks must hold in reserve.<\/p>\n","protected":false},"excerpt":{"rendered":"BEIJING, CHINA – OCTOBER 12: The People’s Bank of China (PBOC) building is pictured on October 12, 2020…\n","protected":false},"author":2,"featured_media":442805,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[15193,21350,4959,51,3085,1700,2441,16,15],"class_list":{"0":"post-442804","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-asia-economy","9":"tag-breaking-news-asia","10":"tag-breaking-news-markets","11":"tag-business","12":"tag-business-news","13":"tag-economy","14":"tag-markets","15":"tag-uk","16":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115246871624461916","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/442804","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=442804"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/442804\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/442805"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=442804"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=442804"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=442804"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}