FX.co ★ China Holds LPR Rates Steady for 2nd Month

The People's Bank of China (PBoC) maintained key lending rates at historically low levels during the July review, aligning with market forecasts. This decision indicates signs of continued economic resilience, although increasing external threats, notably from new US tariffs, continue to pose challenges. The one-year loan prime rate (LPR), serving as the standard for most corporate and household loans, was held constant at 3.0%. Furthermore, the five-year LPR, influential in mortgage rate determinations, was stable at 3.5%. Recent data revealed a GDP growth of 5.2% in the second quarter, marginally surpassing the anticipated 5.1%, though slightly lower than the 5.4% growth seen in the preceding two quarters. The economy expanded by 5.3% in the first half of 2025, despite ongoing deflationary trends, highlighted by the producer price index's (PPI) most significant drop since July 2023. Concurrently, new bank lending outperformed projections, achieving its highest mark in three months. In response to the economic impact of newly imposed US tariffs, the central bank reduced borrowing rates by 10 basis points in May to provide economic support.