Finance
China leaves benchmark lending rates unchanged
Published by Global Banking & Finance Review®
Posted on January 20, 2025
2 min readLast updated: January 27, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 20, 2025
2 min readLast updated: January 27, 2026
China keeps lending rates unchanged due to yuan depreciation, impacting monetary policy and economic growth strategies.
SHANGHAI (Reuters) -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%, while the five-year LPR was unchanged at 3.6%.
CONTEXT
China has stepped up measures ranging from verbal warnings, tweaks to capital flows and issuance of offshore yuan bills to put a floor under the declining yuan.
Investors are dialling back bets on near-term rate cuts in China, the derivatives market shows, as expectations grow that authorities will refrain from easing policy when the yuan is weakening.
The Politburo said earlier last month that China will adopt an "appropriately loose" monetary policy in 2025, the first easing of its stance in some 14 years, alongside a more proactive fiscal policy to spur economic growth.
(Reporting by Shanghai newsroom; Editing by Jacqueline Wong and Shri Navaratnam)
The article discusses China's decision to keep its benchmark lending rates unchanged amid yuan depreciation concerns.
Lending rates influence borrowing costs for businesses and consumers, impacting economic activity and growth.
The one-year LPR is 3.1%, and the five-year LPR is 3.6%.
Explore more articles in the Finance category
