The steady LPR fixings highlighted the central bank’s preference for targeted structural policies to support specific sectors of the economy, rather than resorting to broad-based monetary easing.
A de-escalation in trade tensions between Washington and Beijing also reduced urgency for more stimulus, as the world’s two largest economies agreed to extend a tariff truce for another 90 days.
The Number GameThe one-year loan prime rate (LPR) was kept at 3.0%, while the five-year LPR was unchanged at 3.5%. In a Reuters survey of 23 market participants conducted this week, all participants predicted no change to either of the two rates.
In the latest quarterly monetary policy report, the central bank said it would implement and refine a moderately loose monetary policy while cautioning against funds idling within the banking system.
A string of July data pointed to signs of economic slowdown. China’s factory output growth slumped to an eight-month low last month, retail sales slowed sharply, and new yuan loans contracted for the first time in 20 years.
China said last week that it would offer interest subsidies for businesses in eight consumer service sectors to support services consumption.
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