Catenaa, Friday, June 20, 2025- China kept its benchmark lending rates unchanged Friday, after a rate cut in May as a trade deal with the US eased some growth concerns.
The People’s Bank of China(PBOC) held the 1-year loan prime rate at 3.0% and the 5-year LPR at 3.5%.
Last month, Chinese authorities cut the lending rates for the first time since October by 10 basis points, in their bid to cushion the impact from trade tensions with Washington. A slew of commercial banks also trimmed their deposit rates to protect their net interest margin.
The 1-year LPR influences corporate and most household loans in China, while the 5-year LPR serves as a benchmark for mortgage rates.
Trade-war fears have receded to some extent after US and Chinese trade representatives earlier this month agreed to honor the consensus reached in Geneva in May, allowing for rare earth and tech trade between the two countries while suspending prohibitive levels of tariffs on each other.
The trade truce has allowed some breathing space for Beijing to step in to support its currency, while raising hopes that any hit to the economy will be smaller than previously expected, according to Barclays.
Recent remarks from Chinese policymakers also suggest a “strong degree of satisfaction” with the current stance and outcomes of China’s monetary policy.
The officials are increasingly inclined to place interest rate cuts and other monetary tools in a more “restrained, supporting role,” while exploring alternative avenues to stimulate economic growth, Pang added.
Zhu Hexin, head of the State Administration of Foreign Exchange, said Wednesday at a high-profile financial forum in Shanghai that China’s ability to counter forex market volatility has improved.
PBOC Governor Pan Gongsheng also stressed Beijing’s ambition to expand the international use of the digital yuan and called for a multi-polar global currency system.
