China seen holding rates unchanged as uneven economic recovery persists
China seen holding rates unchanged as uneven economic recovery persists
ReutersThu, June 18, 2026 at 6:23 AM UTC
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1 / 0Paramilitary police officers stand guard in front of the headquarters of PBOC in BeijingParamilitary police officers stand guard in front of the headquarters of the People's Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang
SHANGHAI, June 18 (Reuters) - China is expected to keep benchmark lending rates unchanged for a 13th consecutive month in June, a Reuters survey showed, as a K-shaped divergence in the broad economy persists.
The loan prime rate (LPR), normally charged to banks' most creditworthy clients, is calculated each month after 20 designated commercial banks submit proposed rates to the People's Bank of China (PBOC).
In a Reuters survey of 30 market participants conducted this week, all respondents predicted that at the next review on Monday, the one-year and five-year LPRs would remain steady at 3.00% and 3.50%, respectively.
The strong consensus around steady LPR fixings comes as recent economic data underscores a two-speed growth pattern in the world's second-largest economy, with factories buoyed by surprisingly resilient exports but domestic demand worsening amid a multi-year property downturn.
"Despite the imbalance between robust factory supply and deteriorating domestic demand, Beijing is showing patience," said Henry Hao, senior China economist at Commerzbank.
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"With housing wealth effects still muted and the labour market recovering slowly, policymakers appear reluctant to unleash domestic stimulus, signalling that the economy will likely continue its uneven, export-reliant trajectory without significant near-term intervention until Q3."
At the same time, the central bank appears to be deepening its control over short-term money markets, tying overnight borrowing costs more closely to its seven-day reverse repo rate, which acts as the primary policy rate.
PBOC Governor Pan Gongsheng told the annual Lujiazui Forum this week that the central bank will increase the variety of overnight reverse repo operations and optimise operations for its temporary overnight repo and reverse repo agreements to better manage short-term liquidity conditions.
"The tweak doesn't amount to an outright easing step," Citi analysts said in a note.
"We still expect a symbolic 10 basis-point rate cut in the second half of this year, with risks skewed to earlier, given the weak domestic demand."
(Reporting by Shanghai Newsroom; Editing by Kevin Buckland)
Source: “AOL Money”
