China’s central bank kept benchmark interest rates at their monthly set on Monday, as Beijing again refrained from aggressively stimulating its struggling economy at a time when many other countries are tightening monetary policy to fight against inflation.
The People’s Bank of China kept the one-year prime lending rate unchanged at 3.70%, while the five-year LPR, the benchmark rate for mortgages, was left at 4.45%.
The move was widely expected by analysts and traders after the central bank last week kept the interest rate on its medium-term lending facility unchanged at 2.85% while injecting 200 billion yuan (29, $78 billion) of liquidity into the banking system through the medium-term loan facility.
The PBOC bases its benchmark lending rates each month on quotes from major lenders in the country. Banks, in turn, price new loans using the loan’s prime rate as a benchmark. Since the introduction of the new benchmark in 2019, Chinese banks have gradually replaced existing loans with new loans based on the new lending rates.
Last month, China’s central bank slashed interest rates for first-time home buyers while cutting its benchmark benchmark rate for mortgages by a surprisingly wide margin of 0.15 percentage points.
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