China maintains lending rates at record lows

The People’s Bank of China has kept benchmark lending rates at record low levels at the December fixing, in line with market consensus.

The 1-year loan prime rate, a benchmark for the majority of corporate and household loans, was left at 3.1% in December.

The 5-year loan prime rate, a reference for property mortgages, was kept at 3.6%.

Both key rates were last reduced in October and July.

The latest move came after a pledge by the government this month to raise the 2025 budget deficit to 4% of GDP – or the highest on record.

Policy makers also pledged to shift monetary policy to a “moderately loose” stance in 2025, while distancing from the current “prudent” approach to address the rising challenges within the macroeconomic environment.

The USD/CNY currency pair settled 0.01% lower at 7.2956 on Friday. For the week, the currency pair went up 0.28%, as it extended the gains from the prior two weeks.