The People's Bank of China (PBOC) maintained its benchmark lending rates unchanged for the 14th consecutive month at its monthly fixing on Monday, opting for stability despite recent data highlighting an uneven economic recovery.
The central bank held the one-year loan prime rate (LPR), which serves as the benchmark for most corporate and household loans, at 3.00%.
This decision matched the consensus forecast tracked by Investing.com.
Meanwhile, the five-year LPR, the reference rate for residential mortgages, was maintained at 3.50%.
PBOC's move is an indicator that policymakers are more interested in keeping monetary policy stable amid an uneven economic recovery.
The steady fixings follow the release of soft macroeconomic indicators from Beijing.
China's gross domestic product expanded 4.3% year over year in the second quarter, decelerating from 5.0% in the first quarter due to muted domestic consumption. While first-half exports remained resilient, internal demand indicators were soft, with June consumer price inflation ticking down to 1.0%, versus the 1.1% forecast, and new yuan loans missing expectations at 1.61 trillion yuan.
"On the monetary side, low but positive inflation shouldn't impede further People's Bank of China easing if it is deemed necessary," ING Chief Economist for Greater China Lynn Song said in a July 15 note.
Earlier in July, the central bank said it will keep its monetary policy moderately loose and increase financial support to boost domestic demand and financial innovation.
PBOC also called for better guidance on policy interest rates and improvements in the market-based interest rate, as well an assessment of bond market operations.
"Policymakers have made efforts to maintain ample liquidity, and we expect there is a solid chance we will see a rate cut within the quarter," ING's Song said.
