China holds rates steady as economic growth shows momentum
The People's Bank of China maintained the one-year interest rate at 3.1 percent and the five-year LPR at 3.6 percent. The rates have remained at this level since the quarter-percentage point cut in October 2024.
According to CNBC, China's central bank's decision regarding interest rates follows the American Federal Reserve's decision to keep the benchmark interest rates unchanged. However, Fed officials indicated a potential half-point percentage cut in interest rates by 2025. Beijing is striving to support economic growth and stabilize its currency in the face of growing trade tensions.
— Policymakers recognize the country’s robust growth momentum while remaining cautious due to persistent pressures ahead — said Bruce Pang, an associate at the Chinese University in Hong Kong, as quoted by CNBC, referring to risks related to trade tensions, the Fed's stable policy stance, and already low net interest margins of Chinese banks.
China's economy showed moderate acceleration in the first two months of the year, with retail sales increasing by 4.0 percent compared to the previous year, faster than the 3.7 percent growth recorded in December. Industrial production also exceeded expectations, rising by 5.9 percent year-over-year.
Inflation data, however, highlighted the need for more support from monetary policy to sustain the economic recovery. Consumer price inflation in February fell into negative values for the first time in over a year, while producer price deflation persisted.
