China kept its benchmark lending rates unchanged in August, as policymakers maintain a supportive monetary stance while assessing the pace of the country’s economic recovery.
The one-year loan prime rate (LPR), a market-based benchmark for lending rates, was maintained at 3%, unchanged from July, according to the National Interbank Funding Center.
The over-five-year LPR, which serves as a key reference for mortgage lending by many financial institutions, was also left unchanged at 3.5%.
The decision was in line with market expectations and marks another month of stability for the country’s benchmark lending rates
China’s policymakers have been balancing the need to support domestic demand and economic activity against concerns over financial stability, the property sector and persistent external uncertainties.
The unchanged five-year-plus LPR could also provide some stability to the housing market by avoiding an increase in mortgage borrowing costs, although the property sector continues to face challenges from weak demand and subdued confidence.
Meanwhile, the steady one-year LPR keeps financing costs for businesses broadly unchanged, supporting companies’ working capital and investment decisions.
