The People’s Bank of China left its key lending rates at record lows for a 15th consecutive month in August 2026, in line with market expectations. The decision underscored policymakers’ caution over the potential fallout from the conflict in the Middle East, as second-quarter GDP growth slowed to its weakest pace since the fourth quarter of 2022, even as exports remained buoyed by strong AI-related demand.
The one-year loan prime rate (LPR), the benchmark for most corporate and household borrowing, was held at 3.0%, while the five-year LPR, a key reference for mortgage rates, stayed at 3.5%.
In July, both industrial production and retail sales growth lost momentum. New yuan lending also contracted sharply, posting the steepest decline on record, while housing prices extended their downturn, highlighting the ongoing fragility of the property sector.
The central bank reiterated last week that it would maintain an appropriately accommodative monetary stance and introduce targeted, effective measures as needed.
