China keeps loan prime rates unchanged for 17th straight month

what happened

China kept its benchmark lending rates unchanged in October, marking the 17th month in a row without a move, Reuters reported on Tuesday. The one-year loan prime rate stayed at 3.00% and the five-year rate at 3.50%. The outcome matched expectations, as all 22 market participants in a Reuters poll taken on Monday forecast no change.

According to Reuters, the steady rates suggest policymakers are in no hurry to add monetary stimulus after a strong third-quarter result, when China's economy grew 4.5% year on year, beating forecasts. That eases pressure on Beijing to boost support for its annual growth target.

The People's Bank of China is also weighing a switch of its main policy rate to the overnight reverse repo rate. Governor Pan Gongsheng said the bank would issue guidance to reform loan pricing and diversify benchmarks beyond the LPR.

why it matters

The structural part of the decision matters most for markets. Financially strong companies could link floating-rate loans to the overnight repo rate, while small firms and individuals stay anchored to the LPR. Huatai Securities said this tiered design aims to avoid a one-off shock to the pricing system. If more loans shift to the overnight rate, its fluctuation range is likely to narrow, supporting liquidity stability.

market impact

Yuan and Chinese bonds: no easing keeps yields supported, while the pricing reform changes benchmarks markets watch

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