China Holds LPR Steady for Fourth Straight Month

The People’s Bank of China (PBOC) kept key lending rates at record lows for the fourth consecutive month during the September fixing, in line with market expectations. The decision came despite a rate cut by the US Federal Reserve and growing signs that China's domestic economy may be losing momentum in July and August. The one-year Loan Prime Rate (LPR)—the benchmark for most corporate and household loans—was held steady at 3.0%, while the five-year LPR, which guides mortgage rates, remained unchanged at 3.5%. Both rates were cut by 10 bps in May. Economic data released last week showed industrial output in August grew at its slowest pace since August 2024, while retail sales posted their weakest growth in nine months. Although new yuan loans rebounded in August after an unexpected contraction in July, they came in well below expectations. A prolonged property slump and the government’s campaign to rein in industrial overcapacity continue to weigh on credit demand.