People’s Bank of China Holds Loan Prime Rate Steady

Investing.com– The People’s Bank of China (PBOC) kept its benchmark loan prime rate unchanged on Tuesday after a surprise cut in July, maintaining ultra-loose monetary policies to support economic growth.

The PBOC held the one-year loan prime rate at 3.35%, as expected, while the five-year LPR, used to determine mortgage prices, remained at 3.85%.

In July, the central bank unexpectedly trimmed both rates by about 10 basis points as part of measures to boost local economic growth.

The LPR is determined by the PBOC based on insights from 18 designated commercial banks and serves as a benchmark for lending rates in China. The five-year rate is particularly tied to the country’s struggling property market, which has faced nearly four years of slowing sales and cash constraints.

Despite a slight uptick in Chinese consumer inflation in July, other indicators—lending activity and industrial production—highlight continued economic weakness.

The July rate cut was the PBOC’s first in nearly a year, yet the central bank has persistently maintained loose policy to encourage economic recovery in China, albeit with limited results.

Ongoing economic weakness may prompt the PBOC to consider further rate cuts in the months ahead.