China Keeps Loan Prime Rate Unchanged in September

The People’s Bank of China (PBOC) decided to keep its benchmark loan prime rate steady on Friday but is anticipated to lower the rate further in response to worsening economic conditions in the country.

The PBOC maintained the rate at 3.35%, while the five-year loan prime rate, which influences mortgage rates, remained unchanged at 3.85%. This decision follows the last rate cut in July, which aimed to stimulate economic activity and growth. Both loan prime rates are currently at record-low levels.

In the coming months, analysts expect the central bank to reduce the rates again, particularly as recent economic data indicates a lack of improvement in China’s economy. The nation is facing ongoing deflation and weak private consumption.

The loan prime rate is set by the PBOC based on input from 18 selected commercial banks and serves as a benchmark for lending rates across the country. The five-year rate is particularly significant as it is closely linked to the real estate market, which has been under pressure from nearly four years of declining sales and an ongoing liquidity crisis.