China’s central bank maintains benchmark lending rates despite weak economic data, signaling caution on immediate stimulus.
The People’s Bank of China kept its one-year and five-year loan prime rates unchanged at 3.5% and 3% respectively, defying expectations of a potential cut. The decision follows a string of disappointing economic indicators, including a decline in industrial output and softer retail sales in July.
Analysts had anticipated a surprise rate reduction amid cooling PMI readings and a record contraction in bank lending. However, policymakers appear to favor a wait-and-see approach, despite the yuan’s resilience near multi-year highs against the dollar, which could absorb depreciation risks.
Market expectations for stimulus this year persist, though the timing may now shift to after October’s Fifth Plenum, narrowing the window to meet growth targets.