China’s central bank kept benchmark lending rates steady at its monthly fixing on Monday as Beijing again held off from aggressively stimulating its floundering economy at a time when many other countries are tightening monetary policy to combat inflation.
The People’s Bank of China kept the one-year loan prime rate unchanged at 3.70% while the five-year LPR, the reference rate for mortgages, was left at 4.45%.
The move was widely expected by analysts and traders after the central bank last week kept the interest rate on its one-year medium-term lending facility unchanged at 2.85% while injecting 200 billion yuan ($29.78 billion) of liquidity into the banking system via the medium-term lending facility.
The PBOC bases its benchmark lending rates each month based on quotes from the country’s major lenders. The banks, in turn, price new loans using the loan prime rate as a reference. Since the new benchmark was introduced in 2019, Chinese banks have gradually replaced existing loans with new ones based on the new lending rates.
China’s central bank last month cut interest rates for first-time home buyers while slashing its benchmark reference rate for mortgages by an unexpectedly wide margin of 0.15 percentage points.