China leaves benchmark lending rates unchanged
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China left benchmark lending rates unchanged for a third consecutive month, as expected, as a weakening yuan has limited Beijing's monetary policy easing efforts. At the monthly fixing on Monday, the one-year loan prime rate (LPR) was kept at 3.1%, while the five-year LPR was unchanged at 3.6%. Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. In October 2024, Chinese lenders slashed lending benchmarks by bigger-than-expected margins to revive economic activity. WHY IT'S IMPORTANT China's economy hit the government's ambitions for 5% growth last year, effectively reducing the urgency for imminent monetary stimulus at a time the yuan currency is facing renewed depreciation pressure. Banks' narrowing interest rate margin also limits the scope for monetary easing. BY THE NUMBERS The one-year loan prime rate (LPR) was kept at 3.1%, whi...