FX.co ★ China Holds LPR Steady for Fourth Straight Month

The People's Bank of China (PBOC) maintained its key lending rates at their historic lows for the fourth straight month in September, aligning with market expectations. This stance was taken despite a rate reduction by the US Federal Reserve and increasing indications that China's domestic economy might be losing steam in July and August. The one-year Loan Prime Rate (LPR), which serves as the benchmark for most corporate and household loans, was kept steady at 3.0%. Meanwhile, the five-year LPR, influencing mortgage rates, remained unchanged at 3.5%. Both rates had previously been reduced by 10 basis points in May. Recent economic data revealed that industrial output in August grew at its slowest rate since August 2024, while retail sales experienced their weakest growth in nine months. Although new yuan loans picked up in August following an unexpected contraction in July, they still fell short of expectations. Continuing challenges, such as a prolonged property slump and the government's efforts to reduce industrial overcapacity, are exerting pressure on credit demand.