The headquarters of the People’s Bank of China in Beijing Photo: IC
China’s one-year loan prime rate (LPR), the market-based benchmark lending rate, came in at 3.1 percent on Monday, unchanged from the previous month.
The over-five-year LPR, on which many lenders base their mortgage rates, also remained unchanged at 3.6 percent, according to the National Interbank Funding Center under the country’s central bank.
The LPR, released once a month, is the key benchmark for loan interest rate pricing. The one-year LPR and over-five-year LPR have dropped 35 basis points and 60 basis points, respectively, since the start of 2024.
The two LPRs have remained unchanged for a consecutive of six months since November 2024.
“China’s economy has gone off to a robust start in the first quarter this year and social financing cost is at historically low levels. There is no urgency to lower policy interest rates and cut PRR,” Li Chang’an, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Monday.
China’s GDP grew by 5.4 percent year-on-year in the first three months of the year to reach 31.88 trillion yuan ($4.42 trillion), latest data from the National Bureau of Statistics revealed on Wednesday.
China is “not in a hurry” to step up macro-policy stimulus but is instead maintaining a cautious, wait-and-see approach while preparing to act at the right moment, said Wen Bin, chief economist at China Minsheng Bank.
In the wake of the global market volatilities triggered by US tariffs levied against its trading partners, China launched a series of new measures to stabilize the capital market and restore investor confidence.
In addition, the Ministry of Commerce and eight other departments recently introduced measures aimed at expanding and upgrading consumption in the domestic service sector, as part of the government’s broader efforts to stimulate domestic demand.
A State Council executive meeting held on Friday said that the country will further strengthen counter-cyclical adjustments in order to stabilize employment and foreign trade, boost consumption, expand domestic demand, shore up economic growth.
Looking ahead, Wen said that a key meeting at the end of April will serve as an important observation window. “There are many policies in reserve in the toolkit, including reserve requirement ratio and interest rate cuts, and raising deficit-to-GDP ratio at the appropriate time,” he said.
Beginning April 24, the Ministry of Finance will initiate the issuance of 1.3 trillion yuan ($178.5 billion) of ultra-long special treasury bonds in 2025 and the issuance of 500 billion yuan of special treasury bonds to support large state-owned commercial banks in backing up capital adequacy, according to the Securities Times.
In the coming months, coupled with the increased supply of government bonds, the coordination of monetary policies is expected to accelerate, Li said. The issuance of the special bonds signals continuous strong government spending in the second quarter to shore up the country’s high-quality economic growth, he added.
Global Times
