Despite last week's interest rate drop by the U.S. Federal Reserve, China maintained its benchmark lending rates steady on Monday for the fourth consecutive month.
In a statement released on Monday, the People's Bank of China maintained the prime rate for one-year loans at 3.0% and the prime rate for five-year loans at 3.5%. While the five-year rate affects mortgage pricing, the one-year LPR affects the majority of new and existing loans.
Despite a series of economic indicators indicating symptoms of economic tiredness, the decision on Monday was consistent with experts' predictions that Chinese authorities would postpone significant stimulus measures in the face of a recent stock market boom.
As part of Beijing's efforts to support the economy, the central bank recently lowered the main lending rates by 10 basis points in May.
After the Fed decided to lower rates by a quarter percentage point, the PBOC last Thursday maintained the seven-day reverse repo rate, which is the primary policy rate, at its current level.
The benchmark lending rates, which are often charged to banks' best customers, are determined each month using the proposed rates from specific commercial banks that are submitted to the PBOC.
The impact of frontloading shipments diminished, and the U.S. trade policy that targets transshipment weighed on exports to third countries, causing the country's export growth to decline to 4.4% in August—the lowest growth rate since February.
Later this year, Chinese authorities are anticipated to implement marginal monetary easing in order to guarantee that the second-largest economy in the globe meets the government's yearly growth target of approximately 5%.
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