SHANGHAI, Feb 24 (Reuters) – China left benchmark lending rates unchanged for a ninth consecutive month in February on Tuesday.
WHY IT’S IMPORTANT
The steady LPR fixings in February suggested that the authorities are not in a rush to deliver fresh monetary easing measures, after last month’s sector-targeted rate cuts. Some analysts see limited scope for benchmark rate reductions in the first quarter.
China met its roughly 5% 2025 economic growth target on an export boom, but structural imbalances, trade frictions and rising geopolitical uncertainty cloud the outlook. A Reuters forecast showed economic growth is likely to slow to 4.5% in 2026.
BY THE NUMBERS
The one-year loan prime rate (LPR) was kept at 3.0%, while the five-year LPR was unchanged at 3.5%.
CONTEXT
China’s central bank said earlier this month it will step up financial support to boost domestic demand, as industrial overcapacity and lacklustre consumption weigh on business confidence and dampen the outlook for growth.
The People’s Bank of China lowered interest rates on its structural monetary policy tools by 25 basis points last month, a move seen as having a smaller growth impact than cuts to benchmark rates. It also signalled room this year for further reductions in banks’ reserve requirement ratios and broader rate cuts.
KEY QUOTES
“The central bank still has room to trim the reserve requirement ratio (RRR) and policy rates and is using them as tools to guide expectations, with flexibility and efficiency seen as key,” said analysts at Tianfeng Securities. “Further easing is possible this year, but the timing is hard to pin down and the chance of a cut in the first quarter is limited.”
(Reporting by Shanghai Newsroom; Editing by Kim Coghill)
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