In Shanghai on January 20, China has maintained its benchmark lending rates for a third consecutive month, as anticipated, citing the constraint of a weakening yuan on Beijing's monetary policy easing efforts.
During the monthly fixing on Monday, the one-year loan prime rate (LPR) remained at 3.1%, and the five-year LPR was held steady at 3.6%.
Most loans in China, both new and existing ones, are linked to the one-year LPR, with the five-year rate influencing mortgage pricing.
In October 2024, Chinese lenders widened lending benchmarks beyond expectations to stimulate economic activity.
Last year, China fell short of the government's 5% growth target, decreasing the immediate need for monetary stimulus, especially during yuan depreciation.
The shrinking interest rate margin for banks also constrains the opportunities for monetary easing.
China maintained the one-year loan prime rate (LPR) at 3.1% and the five-year LPR at 3.6%.
China has taken a series of measures, including verbal cautions, adjustments to capital flows, and issuing offshore yuan bills, to stabilize the falling yuan.
Market indicators suggest that investors are scaling back expectations for imminent rate reductions in China, anticipating authorities to withhold easing measures amid yuan devaluation.
The Politburo announced last month that in 2025, China will adopt a looser monetary policy, marking the first policy relaxation in about 14 years, coupled with a more proactive fiscal approach to boost economic growth.