People's Bank of China Holds Lending Rates for 16th Month

The People's Bank of China maintained its benchmark lending rates for the 16th consecutive month on September 20. The central bank kept the one-year loan prime rate at 3.00% and the five-year loan prime rate at 3.50%, a move that aligned with market expectations.

Governor Pan Gongsheng stated that slower loan growth is becoming the new normal. He attributed this trend to shrinking property and local government sectors, which are reducing credit demand more quickly than emerging industries can offset the loss.

The decision to hold rates reflects limited room for monetary easing following a hawkish shift by global central banks. Specifically, the Federal Reserve System recently raised interest rates under the leadership of chief Kevin Warsh, who joined a unanimous decision to increase rates and flagged the possibility of further hikes.