Financial News: China Holds Loan Prime Rates As Expected

China Holds Loan Prime Rates As Expected

02/20/2025 - 01:50:00 (RTTNews)

(RTTNews) - The People's Bank of China maintained its interest rates unchanged for the fourth straight time on Thursday.

The PBoC left its one-year loan prime rate unchanged at 3.10 percent. Likewise, the five-year LPR, the benchmark for mortgage rates, was retained at 3.60 percent. The decision matched expectations.

The bank had reduced its both LPRs by 25 basis points each in October 2024.

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.

Data released this month showed that bank lending surged to a record CNY 5.1 trillion in January but largely due to the season factor. Lending usually remains the strongest at the start of the year.

Earlier, Capital Economics said given the pressures on bank profitability, the PBoC is likely to prioritize lowering reserve requirements before proceeding with more rate cuts.

The firm said the central bank will avoid a rate cut that could trigger additional depreciation of the currency amid trade tariff threats.

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