The People’s Bank of China decided to maintain its loan prime rates unchanged during its latest policy meeting, despite ongoing signs of economic weakness and a prolonged downturn in the real estate market. The 1-year and 5-year loan prime rates were kept at 3% and 3.5% respectively, marking the seventh consecutive month without adjustments, in line with expectations reported by Reuters. n nThe shorter-term rate serves as a reference point for corporate and consumer loans, while the longer-term benchmark influences home financing costs. n nRecent data from November painted a subdued picture of economic activity. Retail sales increased by just 1.3% year-on-year, falling well below the anticipated 2.8% rise and down from 2.9% in the previous month. Industrial production rose 4.8%, missing forecasts of 5% and representing the weakest pace since August 2024. n nFixed asset investment, which includes real estate, declined by 2.6% from January to November compared to the same period last year, a steeper drop than the 2.3% contraction economists had projected. n nHousing prices continued to slide, underscoring persistent challenges in the property market. In major cities such as Beijing, Guangzhou, and Shenzhen, new home prices dropped 1.2% annually, while resale units saw a more pronounced decline of 5.8%. n nTo counteract these headwinds, China’s finance ministry recently announced plans to issue ultra-long-term special government bonds in the coming year to finance critical infrastructure and development projects. n nThe nation has been grappling with deflationary trends, prompting authorities to pledge strong backing for initiatives aimed at stimulating consumer spending. n nAn interim trade agreement with the United States, which paused high tariffs on Chinese exports, may provide a boost to foreign shipments and support the government’s goal of achieving approximately 5% GDP growth in 2025. n nOn Monday, mainland China’s CSI 300 index gained 0.43%. The onshore yuan remained stable at 7.04 per U.S. dollar, while the offshore version dipped slightly to 7.03. n— news from CNBC
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China keeps benchmark lending rates steady for a seventh straight month despite weak economic data
China ‘s central bank kept its loan prime rates steady on Monday, even as the world ‘s second largest economy has seen weak economic data and an extended slump in its property sector. n nThe People ‘s Bank of China kept its 1-year and 5-year loan prime rates unchanged at 3% and 3.5% respectively, holding them for a seventh straight meeting, in line with a Reuters survey. n nThe 1-year rate acts as a benchmark for new loans, while the 5-year helps peg mortgage rates. n nThe PBOC ‘s decision comes amid downbeat economic data from China in November, including lower-than-expected retail sales and industrial output. n nRetail sales rose 1.3% last month from a year earlier, sharply missing Reuters ‘ median forecast for a 2.8% growth, and slowing from 2.9% rise in the prior month. n nIndustrial production also missed expectations, climbing 4.8% in November from a year earlier compared with estimates for a 5% jump, and marking its weakest growth since August 2024. n nChina continues to reel from a protracted slump in its real estate sector. Investment in fixed assets, which includes property, contracted 2.6% over the January through November period compared with a year earlier, sharper than the 2.3% drop estimated by economists. n nPrices of new homes also also continued to decline in November, showing persistent weakness in China ‘s property sector. n nNew home prices fell 1.2% in tier-1 cities including Beijing, Guangzhou and Shenzhen while resale home prices dropped 5.8% from a year earlier. n nEarlier this month, China ‘s finance ministry said it planned to issue ultra-long-term special government bonds next year to fund construction of key projects and new infrastructure projects. n nThe country has been contending with deflationary pressures, and policymakers have vowed to “vigorously support the implementation of special actions to boost consumption.” n nAn interim trade deal with the Washington that saw a suspension of prohibitive levels of tariffs on Chinese exports, however, could boost shipments to the U.S. and help the country realize its “around 5%” economic growth target for 2025. n nMainland China ‘s CSI 300 index was up 0.43% on Monday. The onshore yuan was flat at 7.04 against the dollar, while the offshore yuan weakened marginally to trade at 7.03 against the greenback. n n— CNBC ‘s Anniek Bao contributed to this report.