China Keeps Key Lending Rates On Hold

(RTTNews) - The People's Bank of China maintained its interest rates unchanged on Monday as the economy faces subdued domestic demand amid challenging global economic conditions.

The bank retained its one-year loan prime rate at 3.0 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was kept unchanged at 3.50 percent.

The bank had reduced its both LPRs by quarter points in October 2024 and 10 basis points each in May.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

The monetary policy announcement came after official data showed that the economic growth eased to 5.2 percent in the second quarter from 5.4 percent in the first quarter. However, this was above the government's full year growth target of around 5 percent.

Despite strong headwinds, China logged a strong exports growth of 5.8 percent in June. While growth in industrial production accelerated to 6.8 percent in June, retail sales increased at a slower pace of 4.8 percent and fixed asset investment grew only 2.8 percent in the first half of the year.