China Central Bank Leaves Benchmark Lending Rates Unchanged for 16th Month

The People's Bank of China (PBOC) has left its benchmark lending rates unchanged for the 16th consecutive month. The one-year Loan Prime Rate (LPR), which serves as a benchmark for most new and existing household and corporate loans, remained at 3%, while the five-year LPR, which largely influences mortgage rates, stayed at 3.5%. Both rates have remained unchanged since June 2025. The decision met market expectations, as a Reuters poll of 21 economists unanimously projected no change.

According to Citi economists, the recent interest rate hike by the US Federal Reserve makes it difficult for China to implement easing monetary policy measures. Wen Bin, chief economist at China Minsheng Bank, attributed the decision to the relative resilience of the Chinese economy, citing a recovery in exports, rising consumer and producer price indices, and increased industrial production in August. He noted that the relatively low interest rate level has already supported the real economy and reduced the need for further cuts. PBOC Governor Pan Gongsheng stated that slowing credit growth is becoming "normal" against the backdrop of shrinking demand from the real estate and local government sectors.