BEIJING, CHINA – DECEMBER 22: A woman walks past the headquarters of the People’s Bank of China (PBOC) in Beijing, China on December 22, 2025.
Zhang Jianyi China News Service | getty images
China kept its benchmark lending rates unchanged for the 11th consecutive month as policymakers weighed the economic fallout from the Middle East war against resilient growth at home and weak deflationary pressures, giving Beijing less urgency to act.
The People’s Bank of China kept the loan prime rate, or LPR, unchanged on Monday as rising global oil prices pushed up energy prices amid rising tensions in the Middle East and clouded the growth outlook.
The one-year LPR, a benchmark for new loans, was held at 3.0% while the five-year LPR, a reference for mortgage rates, was unchanged at 3.5%.
The decision was taken as the world’s second-largest economy grew 5% in the first quarter, faster than 4.5% in the previous quarter, and at the top of its full-year target range. Beijing cut its growth target for 2026 to between 4.5% and 5%, the least ambitious target on record since the 1990s.
China’s factory-gate prices also rose for the first time in more than three years, having climbed 0.5% in March from a year earlier, a sign that import-cost pressures are beginning to weigh on the economy. Consumer inflation made its biggest jump in more than three years, rising 1.3% in February, before slowing to 1% in March.
Upbeat growth has eased pressure for additional stimulus as early as 2026, prompting economists to scale back expectations for interest rate cuts.
Yu Song, chief China economist at UBS Securities, said policymakers will likely take a “wait and see” approach, adding that rising inflation will reduce the PBOC’s incentive to cut policy rates or introduce major easing in the near term.
“The government may also need time to assess the impact of external uncertainties amid the Middle East conflict,” Song said.
PBOC said it will maintain “Pro” and “Moderately Loose” The monetary stance this year will promote growth by keeping its currency stable.
Speaking at the International Monetary Fund meeting in Washington last week, China’s central bank governor Pan Gongsheng warned that rising geopolitical tensions, protectionism and trade barriers Global growth was affected and led to financial market instability. The PAN urged deeper international policy coordination to safeguard macroeconomic and financial stability.
China’s Finance Minister Lan Foan also reiterated Beijing’s call to boost domestic demand and boost consumption while providing more “Global Public Goods” For shared benefit.
