China holds main lending rate for 14th month

The People's Bank of China has kept its benchmark lending rates unchanged for the fourteenth consecutive month, with the one-year loan rate remaining at 3.00% and the five-year loan rate at 3.50%. This decision comes amid a slowdown in China's economic growth, which expanded by 4.3% in the second quarter — the slowest pace since 2022 — due to weak demand for financing from households and businesses. The bank aims to strike a balance between supporting economic activity and maintaining the profitability of the banking sector, especially as confidence remains weak and banks face increasing pressure on their profits. New loans totaled 1.61 trillion yuan, reflecting subdued demand despite declining borrowing costs. It is likely that interest rates will be lowered in the current quarter if economic data continues to show signs of declining activity.

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