Beijing – On Thursday, China’s People’s Bank announced that the benchmark loan prime rates (LPR) remain unchanged for the 15th straight month. The one‑year LPR stayed at 3.00% and the five‑year LPR held at 3.50%, matching market expectations.

Why the rates matter

Analysts say the steady rates indicate that policymakers are likely to rely more on accelerated fiscal spending rather than fresh monetary easing to bolster a slowing economy. Banks continue to face near‑record‑low profit margins, limiting the room for further rate cuts.

Survey of market participants

A Reuters poll of 25 market participants conducted earlier this week found unanimous agreement that the rates would not change in August.

Economic backdrop

Recent data from July showed weak domestic demand across industrial output, retail sales, and credit lending. New yuan loans fell to a record low, missing forecasts as seasonal factors and reduced household credit demand weighed on lending activity.

At the July Politburo meeting, Chinese leaders pledged to accelerate fiscal spending on already‑budgeted infrastructure projects for the remainder of the year, opting against launching major new stimulus measures.

Central bank stance

The central bank reiterated its commitment to maintaining an appropriately loose monetary stance and to deploying practical, effective measures as needed, but stopped short of signaling explicit cuts to policy rates or the banks’ reserve‑requirement ratio.

Expert commentary

Barclays noted that despite an accommodative stance, the second‑quarter PBOC Monetary Policy Report suggests the central bank is “in no rush to cut policy rates or the reserve‑requirement ratio.” The firm expects policy rates to stay unchanged throughout 2026, citing the record‑low net interest margins of banks as a limiting factor for further rate reductions.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.