Beijing January 20 2025: China left benchmark lending rates unchanged for a third consecutive month, as expected, as a weakening yuan has limited Beijing’s monetary policy easing efforts.
At the monthly fixing on Monday, the one-year loan prime rate (LPR) was kept at 3.1%, while the five-year LPR was unchanged at 3.6%.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
In October 2024, Chinese lenders slashed lending benchmarks by bigger-than-expected margins to revive economic activity.
WHY IT’S IMPORTANT
China’s economy hit the government’s ambitions for 5% growth last year, effectively reducing the urgency for imminent monetary stimulus at a time the yuan currency is facing renewed depreciation pressure.
Banks’ narrowing interest rate margin also limits the scope for monetary easing.
