China’s central bank kept benchmark rates unchanged for a ninth month, balancing growth support with yuan stability.
Summary:
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PBOC keeps 1-year LPR at 3.0%, 5-year at 3.5%
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Ninth consecutive month of unchanged benchmark rates
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Growth slowed to 4.5% y/y in Q4, weakest since post-Covid reopening
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Yuan appreciation adds currency-stability considerations
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Policymakers balancing stimulus needs with FX and export risks
China’s central bank has left its benchmark lending rates unchanged for a ninth straight month, underscoring the delicate balance policymakers are attempting to strike between supporting a slowing economy and maintaining currency stability.
The People’s Bank of China held its one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5%. The one-year rate serves as the reference for most new and outstanding corporate and household loans, while the five-year rate guides mortgage pricing.
The decision comes against a backdrop of moderating economic momentum. China’s economy expanded 4.5% year-on-year in the fourth quarter, marking its slowest pace since authorities dismantled stringent Covid-era restrictions in late 2022. Domestic demand remains subdued as households rein in spending amid a prolonged property downturn, a soft labour market and uncertain income prospects.
Beijing has attempted to stimulate activity through targeted measures, including efforts to promote services consumption in areas such as elderly care, tourism and leisure. Officials hope these segments can offset persistently weak demand for goods, particularly as the real estate sector continues to drag on broader sentiment.
At the same time, currency dynamics have complicated the policy outlook. The yuan has strengthened in recent months, aided in part by a softer U.S. dollar. tariffs and intense global competition
