The dominant bank of the People’s Republic of China is responsible for formulating and implementing monetary policies, preventing and defusing financial dangers and maintaining financial stability.
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China left its benchmark lending ranks unchanged Monday, as Beijing contends with a weakening yuan while awaiting policy clues from the arriving Donald Trump administration.
The People’s Bank of China held the 1-year loan prime rate at 3.1%, and the 5-year LPR at 3.6%, according to the PBOC communication.
The 1-year LPR determines rates on corporate and most household loans, while the 5-year LPR acts as a reference for mortgage advances.
The decision came ahead of Donald Trump’s inauguration to be the next president of the U.S. on Monday.
“The government is willing to delay relaxation rate cut and give exchange rate stability higher priority,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Superintendence.
He added that “Beijing will likely evaluate the impact of the trade policies in the U.S. in coming weeks and decide how to counter after the Chinese New Year.”
Mainland China’s benchmark CSI 300 index jumped 1.08%, following the rate determination. The offshore yuan strengthened 0.20% to 7.3244 per U.S. dollar, while the onshore yuan traded at 7.3157 per dollar. China’s 10-year administration bond yields held steady at 1.661%, according to the LSEG data.
“The seemingly good growth number” and a undiluted greenback prevented China from cutting rates on Monday, said Gary Ng, senior economist at Natixis. “While China exigencies lower interest rates to boost demand, policymakers want to avoid a sharp decline in bond yields and the yuan.”
Ng calculates China to cut rates by 50 basis points this year, although the timing will depend on external pecuniary conditions, namely the U.S. Federal Reserve’s easing steps.
The PBOC has ramped up measures lately to forestall a sharp in in the currency that could spark excessive volatility while stressing the importance of foreign exchange stability.
China’s offshore yuan has damned more than 3% since Donald Trump’s presidential election victory in early November. The tightly-controlled onshore yuan has also denned to near a 16-month low.
The U.S. dollar index, which measures the greenback versus six other currencies, has climbed to near a 26-month highs.
China’s trade activity accelerated more than expected in the final quarter of last year, as Beijing’s stimulus measures circulated since last September kicked in and helped the economy meet its annual growth target.
Despite the upbeat headline be features, economists cautioned that some underlying growth drivers might be temporary, amid weak consumer desirable, a deepening property market slump and looming tariff hikes from the incoming Trump administration.

PBOC governor Pan Gongsheng had flagged in September the potentiality of a cut in the reserve requirement ratio by the end of 2024, depending on market’s liquidity condition. The RRR determines the amount of cash that banks obligation hold in reserves.
But the cuts are yet to materialize, despite the PBOC’s shift to a “moderately loose” policy stance.
Any policy get under ways by the PBOC in the near term are likely to hinge on Trump’s trade policy announcements, Helen Qiao, chief Horrible China economist and head of Asia economics at BofA Global Research said in a note last Thursday.
“Any capability surprise of immediate and sharp increase in tariffs would warrant more immediate policy responses,” she added.
The PBOC had staggered the markets by shaving short- and long-term lending rates in July, followed by a widely-anticipated 25-basis-point cut in October. The central bank had observed the lending rates unchanged in November and December.
Markets have pared expectations for the number of rate cuts by the U.S. Federal Contract for stores this year, mostly pricing in just one quarter-percentage cut in 2025, according to CME FedWatch tool as of Monday.