China Holds Lending Rates Steady Amid Global Policy Shift

The one-year loan prime rate remains at 3.00%, while the five-year rate stays at 3.50%. This pause reflects a narrowing window for policy easing, particularly as the U.S. Federal Reserve adopts a more hawkish tone, pushing yield premiums on 10-year U.S. Treasuries to record highs compared to Chinese government bonds. Central bank Governor Pan Gongsheng recently noted that slower loan growth has become a new normal, as shrinking property and local government sectors temper credit demand.

Analysts suggest the appetite for broad-based easing is fading. Serena Zhou of Mizuho Securities expects rates to hold through the fourth quarter unless domestic demand deteriorates sharply. BNP Paribas economist Jacqueline Rong views China as being in the late stages of its rate-cutting cycle, constrained by tight net interest margins and a transition toward mild inflation. Barring a significant disappointment in economic growth, the central bank appears set to remain on the sidelines for the remainder of the year.