China has kept its benchmark lending rates, the one-year Loan Prime Rate (LPR) and the five-year LPR, unchanged for the 15th consecutive month. The one-year LPR remained at 3.0%, while the over-five-year LPR, which influences mortgage rates, stayed at 3.5%. This decision was in line with a Reuters survey of market participants, with all 21 surveyed analysts expecting no change in September.
Policymakers appear to be exercising caution and patience, opting against delivering fresh stimulus even as major global central banks shift towards more hawkish stances. This wait-and-see approach comes despite some analysts flagging the possibility of a surprise cut earlier in the week, particularly after a run of weaker economic data, including a July decline in industrial output, softer-than-expected retail sales, and extending house-price falls.
The LPR is calculated monthly based on submissions from 20 designated commercial banks to the People's Bank of China (PBOC). The rates have been at their lowest levels since the benchmark's introduction in 2019, with the last cut occurring in May 2025. While the PBOC has maintained current LPRs, it still possesses other tools like reserve requirement ratio cuts and targeted relending facilities to inject liquidity. Analysts suggest that significant policy moves might be delayed until after October's Fifth Plenum, where long-term economic priorities are typically outlined.
