China Retains Loan Prime Rates As Expected
2025-01-14
3601
(fxcue news) - The People's Bank of China maintained its interest rates for the third straight session on Monday as policymakers await the stance of new US administration.
The PBoC left its one-year loan prime rate at 3.10 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was held at 3.60 percent. 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.
Although the ability to manoeuvre the monetary policy is limited due to the weakness of yuan, the central bank is likely to lower policy rates amid trade tariff hike threats by US President-elect Donald Trump.
Beijing has unveiled a range of fiscal and monetary easing measures last year, which helped the economy to achieve its around 5 percent growth target in 2024. However, economic growth is expected to weaken this year as a whole.
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