China opted to keep its benchmark lending rates unchanged on Thursday, aligning with the predictions of the market, with the one-year LPR remaining at 3.45% and the five-year LPR at 3.95%.
The decision to maintain the steady Loan Prime Rate (LPR) fixings indicates that Beijing’s attempts at monetary easing continue to face constraints due to narrowing interest rate margins and a depreciating currency.
According to a Reuters survey involving 30 market experts, 70% of respondents expected the rates to remain steady. The Chinese property market reflected a significant decline in new home prices in May, marking the sharpest drop in nearly a decade. Despite government initiatives to address excessive supply and aid debt-ridden developers, the sector remains subdued.
Moreover, new bank lending in China experienced a less substantial rebound than anticipated in May, while key monetary indicators reached historic lows. These developments suggest that the world’s second-largest economy is still encountering challenges in accelerating its recovery pace.
