China left benchmark lending rates unchanged for the 13th consecutive month in June on Monday, in line with market expectations.
The People’s Bank of China (PBOC) left its key benchmark lending rates unchanged for the 13th consecutive month in Jun-26, aligned with broad market expectations. The central bank maintained the one-year loan prime rate (LPR) the primary anchor for corporate and household credit at 3.00%, while keeping the five-year LPR steady at 3.50%. The decision to hold these policy rates at historic lows underscores a highly cautious approach by monetary authorities, which remain highly attentive to global commodity volatility and potential supply chain vulnerabilities emerging from the ongoing conflict in the Middle East.
MBSB noted that the steady policy decision highlights that China is in no immediate rush to accelerate monetary easing, prioritising currency and financial stability over aggressive credit expansion. The central bank officials appear increasingly comfortable with a more measured pace of credit growth, reflecting a broader structural focus on credit efficiency rather than raw volume. This policy restraint comes despite an increasingly pronounced “two-speed” growth within the world’s second-largest economy. While the industrial sector remains a primary growth engine, bolstered by surprisingly resilient export volumes and an acceleration in industrial output growth this past month, the domestic front is rather weak, under the weight of a prolonged property market downturn. Meanwhile, retail sales unexpectedly fell in May-26, marking the first decline since Dec-22.
The steady loan prime rates (LPRs) signal authorities are in no rush to ease policy, even as broader economic divergence persists and policymakers show little concern about slowing credit growth. More targeted policy supports may be considered, such as consumption incentives, sector-specific credit facilities and measures to stabilize the property market, to address weakness in the domestic economy.
