NextFin news, On Monday, September 22, 2025, the People's Bank of China (PBOC) announced it would maintain its benchmark lending rates at current levels, leaving the one-year loan prime rate at 3.0% and the five-year rate at 3.5%. This marks the fourth consecutive month without a change, despite the US Federal Reserve's decision last week to cut interest rates by 25 basis points.
The PBOC also kept its seven-day reverse repo rate, a key policy rate, unchanged following the Fed's move. The benchmark lending rates are set monthly based on proposals from designated commercial banks and primarily affect top-tier borrowers and mortgage rates.
The decision reflects China's focus on economic stability amid ongoing low inflation and deflationary pressures. China's economy showed signs of slowing in August 2025, with retail sales growing only 3.4%, industrial output growth slowing to 5.2%, and consumer prices falling more than expected. Wholesale price deflation has persisted for nearly three years.
Export growth also decelerated to 4.4% in August, the weakest since February, influenced by diminishing frontloading shipments and US trade policies targeting transshipment. Barclays economists noted a further deterioration in housing market indicators due to a worsening real estate slump and fading fiscal stimulus.
Despite these challenges, economists anticipate marginal monetary easing measures later this year to help China meet its annual growth target of around 5%. Barclays projects China's real GDP growth at 4.5% for 2025 and expects the PBOC to cut the seven-day reverse repo rate and loan prime rate by 10 basis points in the fourth quarter.
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