China kept its benchmark lending rates unchanged on Sunday, leaving borrowing costs steady for the 16th consecutive month. The People’s Bank of China maintained the one-year loan prime rate at 3.00 percent and held the five-year loan prime rate at 3.50 percent, matching forecasts from all 21 economists surveyed by Reuters.
Lending benchmarks remain steady
The benchmarks last moved in May 2025. China sets the rates monthly, with the one-year rate influencing most new and outstanding loans, while the five-year gauge guides mortgage pricing.
PBOC Governor Pan Gongsheng stated that slower loan growth is turning normal as contracting property and local government sectors lower borrowing demand faster than new industries can fill the gap.
Policy rate framework
The central bank kept its seven-day reverse repo rate at 1.4 percent. The rate was steady.
Since mid-2024, the monetary authority has used the seven-day reverse repo rate as its primary policy anchor, replacing the medium-term lending facility. In July 2024, policymakers lowered that rate by 10 basis points, reducing it to 1.7 percent from 1.8 percent alongside corresponding cuts to loan prime rates.
Diverging policy paths continue to shape capital flows, with the yield premium on 10-year US Treasuries over Chinese sovereign debt lingering near an all-time peak after the Federal Reserve raised US interest rates the previous week and flagged additional hikes.
Related: NBP rejects plan to link mortgage rates to policy benchmark
Source: People's Bank of China
