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Investing.com-- The People’s Bank of China left its benchmark loan prime rate unchanged on Thursday as widely expected, as Beijing grapples with shoring up economic growth and stemming weakness in the yuan.
The PBOC left its one-year LPR at 3.10%, while the five-year rate, which factors into mortgage prices, was left unchanged at 3.60%. The move was widely expected by markets, with both rates remaining at record lows after some cuts over the past two years.
The LPR is determined by the PBOC based on considerations from 18 designated commercial banks, and is used as a benchmark for lending rates in the country. The PBOC had steadily trimmed the rate over the past two years, with low lending rates also serving to support the property market.
Beijing is largely trying to strike a balance between maintaining loose monetary conditions and stemming further losses in the yuan, which in January slid to an over one-year low.
This comes against the backdrop of an escalating trade war with the U.S., after President Donald Trump imposed 10% tariffs against the country. Trump has also outlined plans to increase tariffs on China, and has targeted other key commodity and industrial sectors with tariffs.
Beijing retaliated with its own trade measures against the U.S. But the prospect of a trade war presents more economic headwinds for China.
To this end, the PBOC is expected to trim rates even further, although the prospect of further monetary easing remains limited in the face of yuan weakness.
Focus is on more fiscal stimulus in China over the coming months, especially on whether Beijing will release measures to support laggard consumer spending.