Chinese Banks Hold Lending Rates Steady Following PBOC's Policy

The People’s Bank of China opts for liquidity injections over rate cuts to stimulate economic activities.

Chinese commercial banks have decided to keep their benchmark lending rates unchanged, in line with the People’s Bank of China’s (PBOC) decision to maintain its policy rates.
The one-year loan prime rate remains at 3.45% and the five-year rate, which is a benchmark for mortgages, at 4.2%.
Instead of reducing the interest rate, the PBOC infused the largest amount of cash into the financial system since 2016 via its one-year loans to meet liquidity requirements.
The decision has led to speculations about whether the PBOC will reduce the reserve requirement ratio for banks before the end of this year.
The decision of commercial banks to keep the lending rates unchanged aligns with the PBOC’s strategy to use liquidity injections rather than interest rate cuts to stimulate economic activities.