China kept its benchmark rates unchanged for the 13th straight month in June as expected, reflecting caution over uncertainty surrounding the Middle East conflict and mixed domestic economic data.
The one-year loan prime rate or LPR stayed at 3% and the five-year LPR was unmoved at 3.5%, according to the People's Bank of China on Monday.
The figures are aligned with the no-change forecast given by 30 market participants surveyed by Reuters.
Both rates have been kept unchanged since June 2025.
The decision reflects caution as Middle East tension remains. The U.S. and Iran are still negotiating for a peace treaty that could end their war. A joint statement from mediating countries Qatar and Pakistan said the parties agreed to a roadmap towards reaching a final deal in 60 days.
Analysts from ANZ predicted that the rates will remain, but fiscal spending might pick up as the global oil shock gradually wanes.
"We also maintain our view of no rate cut this year, while seeing scope for targeted support
from the People's Bank of China," ANZ economists Vicky Xiao Zhou, Zhaopeng Xing and Raymond Yeung said in a May 16 note.
Domestically, China's economic data in May was mixed. Weak demand brought down retail sales and fixed asset investment last week, but industrial production grew stronger than expected due to external demand.
Official data showed that retail sales slipped 0.6% from a year earlier, while fixed asset investment fell 4.1% year on year.
Meanwhile, industrial production rose 4.5% year on year.
"The lack of investment appetite is one of the factors impacting markets, translating into low borrowing demand and, consequently, banks parking more funds in government bonds," Lynn Song, ING's chief economist for Greater China, said in a June 16 note. "Policymakers have expressed an intention to stabilize investment this year. It looks like they have their work cut out."
