China Holds Benchmark Lending Rates Unchanged for Fifth Month

China kept benchmark lending rates unchanged for a fifth month on Friday, as expected, but analysts say more cuts are possible given the central bank’s vow to bolster the Covid-ravaged economy.

The one-year loan prime rate (LPR) remained unchanged at 3.65%.

The five-year LPR rate, widely used as a benchmark for home loans, stayed at 4.30%. Both LPRs were last trimmed in August.

The January LPR setting is in line with the result of a Reuters poll.

Analysts pointed to a number of factors, including the upcoming Lunar New Year holiday, the decision by the People’s Bank of China (PBOC) to maintain its policy rate unchanged this month, and a new mortgage rate method.

However, analysts predict further relaxation in the near future. According to Capital Economics, rate reductions could come as soon as next month.

Though the government’s sudden end to its zero-COVID policy has fueled hopes of a robust rebound, China’s GDP grew by only 3% in 2022, far below the official target.

In a report released on Thursday, Goldman Sachs warned that the effects of three years of zero-Covid policy could prevent a consumption rebound in the future.