China leaves lending benchmarks unchanged for 12th month in May

SHANGHAI - China left benchmark lending rates unchanged for the 12th consecutive month in May on Wednesday, in line with market expectations.

WHY IT'S IMPORTANT

Ample interbank liquidity and the tone of the PBOC's quarterly report suggest policymakers are in no rush to cut rates, despite lingering softness in economic activity and lending.

BY THE NUMBERS

The one-year loan prime rate (LPR) was kept at 3.00%, while the five-year LPR was unchanged at 3.50%.

In a Reuters survey of 20 market participants conducted this week, all participants predicted no change to either of the two rates.

CONTEXT

** The seven-day reverse repo rate, which serves as the anchor for loan prime rate (LPR) pricing, remained unchanged this year.

** China's growth lost momentum in April, with industrial output cooling and retail sales sinking to more than ​three-year lows as the world's second-biggest economy wrestled with higher energy costs from the Iran war and persistently weak domestic demand.

KEY QUOTES

** TD Securities

"We foresee the PBOC being more hesitant to cut rates to stimulate growth after the surge in producer prices, which may reflect a more worrying inflation backdrop."

"We expect targeted fiscal stimulus from Beijing, especially on infrastructure investment rather than large-scale measures."

** Huatai Securities

The central bank for the first time added "targeted and effective" before "moderately loose" monetary policy in its first quarter policy implementation report, while emphasising the need to "strengthen the economy's endogenous growth drivers" - both signals that the case for broad-based easing has weakened.

(Reporting by Shanghai Newsroom; Editing by Jacqueline Wong)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 19, 2026 at 6:31 PM.