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China has maintained its benchmark lending rates for the third straight month, keeping the one-year loan prime rate at 3.1% and the five-year rate at 3.6%.
Despite plans for “appropriately loose” monetary policy in 2025, the weakening yuan is limiting Beijing’s ability to implement stimulus measures.
While China achieved its 5% growth target last year, reducing the immediate need for stimulus, the combination of currency pressures and banks’ narrowing interest rate margins is constraining Beijing’s monetary policy options.
Market derivatives now show investors scaling back expectations for near-term rate cuts, suggesting a growing recognition that currency stability may take precedence over aggressive monetary easing in the near term.
