People's Bank of China Keeps Loan Prime Rate Steady

Investing.com– The People’s Bank of China (PBOC) left its benchmark loan prime rate (LPR) unchanged on Friday, as expected, with Beijing now set to roll out more fiscal spending in the coming year to boost growth.

The PBOC maintained its one-year LPR at 3.10%, while the five-year LPR remained at 3.6% in the central bank’s final rate decision for the year. The central bank had cut the one-year rate twice this year, and the five-year rate, used to determine mortgage rates, was cut thrice, pulling both rates further into record-low territory.

The LPR is set by the PBOC based on considerations from 18 designated commercial banks and serves as a benchmark for lending rates in the country.

Analysts widely expected the LPR to stay unchanged, as the PBOC appeared to have limited room for further rate cuts due to a weakening yuan. Earlier this week, the currency slipped to its weakest level in 15 months.

Recent monetary stimulus measures from China have yielded limited results in supporting economic growth.

The country is now expected to ramp up fiscal spending in the coming year to boost growth and may also implement targeted fiscal measures to support private spending and the property market.

However, Beijing has so far provided scant details on how it plans to increase stimulus in the upcoming year. Policymakers are seeking more clarity on what a Donald Trump presidency in the U.S. will mean for China, especially with the President-elect’s intentions to impose steep trade tariffs on the country.