On Monday, China's central bank maintained its benchmark lending rates, a move that was widely anticipated following recent government initiatives to bolster the property market. The People's Bank of China (PBoC) kept the one-year loan prime rate (LPR) steady at 3.45 percent.
Similarly, the five-year LPR, which serves as a benchmark for mortgage rates, was held at 3.95 percent. The last adjustment to the five-year LPR occurred in February, when it was reduced by 5 basis points to provide further support to the property sector.
The PBoC sets the LPR on a monthly basis, drawing input from 18 designated banks, though Beijing wields considerable influence over these decisions. The LPR replaced the traditional benchmark lending rate in August 2019.
This interest rate decision met market expectations, as the medium-term lending facility (MLF) rate was left unchanged last week. The central bank had executed CNY 125 billion in one-year MLF operations at an interest rate of 2.5 percent.
In a related move, China initiated the issuance of CNY 1 trillion in special long-term government bonds aimed at funding strategic projects.
Official data indicated that China's industrial output growth surged to 6.7 percent in April, buoyed by strong exports. Conversely, retail sales growth decelerated to 2.3 percent, highlighting an uneven economic recovery and underscoring the need for additional government measures to meet the official growth target.
Recent projections from the Organization for Economic Co-operation and Development (OECD) suggest that China may fall short of its official growth target of around 5 percent for this year. The OECD forecasts that the world's second-largest economy will grow by 4.9 percent in 2023 and 4.5 percent in 2025.
