China left the loan prime rate (LPR) unchanged for a ninth straight month on the 24th. China last month cut rates and raised the loan limit for rural areas, small businesses, and the science and technology sector, but it is expected to hold off on additional easing measures for the time being.
The People's Bank of China said it will keep the 1-year LPR for February at 3% and the 5-year LPR at 3.5%. The LPR is the rate banks apply to customers with high creditworthiness and is calculated based on the proposed rates commercial banks submit to the central bank. The 1-year LPR affects household loans, while the 5-year LPR affects mortgage loan lending rates. The central bank cut the LPR in May last year for the first time in seven months and has kept rates steady since.
Reuters suggests that Chinese authorities are not rushing additional monetary easing measures, noting that some analysts see limited room for further benchmark rate cuts in the first quarter of this year.
However, China's economic growth rate this year is expected to slow to around 4.5% from a year earlier, and the central bank said earlier this month that excess supply and sluggish consumption are weighing on the economy, pledging to step up financial support to boost domestic demand. Accordingly, the People's Bank of China is still seen as having room to cut banks' reserve requirement ratio (RRR) and interest rates this year.