China set to hold lending rates steady for 17th straight month as growth rebounds

China is expected to keep its benchmark lending rates unchanged for a 17th consecutive month in October, as stronger-than-expected third-quarter economic growth reduces the prospects of near-term monetary easing.

All 22 respondents in a Reuters survey conducted this week expect the People’s Bank of China (PBOC) to maintain the one-year loan prime rate (LPR) at 3.00 per cent and the five-year LPR at 3.50 per cent at its upcoming review on Tuesday.

The loan prime rate, which serves as a benchmark for lending rates charged to borrowers, is calculated monthly based on submissions from 20 designated commercial banks.

Stronger growth eases pressure for stimulus

China’s economic growth rebounded from three-year lows in the third quarter, as strong exports offset weak domestic consumption and cautious consumer spending.

However, analysts have warned that the economy’s growing reliance on external demand is deepening structural imbalances, raising concerns about the sustainability of the recovery.

Market participants expect Beijing to achieve its 2026 economic growth target of 4.5 per cent to 5.0 per cent without additional stimulus measures, supported by a strong start to the year and recent modest fiscal and monetary support.

Global monetary policy outlook in focus

The broad consensus for unchanged lending rates comes as some major economies move towards tighter monetary policies to contain inflationary pressures.

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Meanwhile, China’s long-dated bond yields have hovered near a 15-month low, reflecting persistent concerns about the country’s economic outlook and subdued domestic demand.

Investors are looking for clues on the central bank’s policy direction from a key financial forum in Beijing on Monday, where PBOC Governor Pan Gongsheng is scheduled to speak.

Property market remains a key concern

China’s struggling property sector continues to pose a challenge to the country’s economic recovery. New home prices fell again in September, extending a downturn that has lasted more than three years.

The continued decline suggests that policy support has yet to trigger a broad-based recovery in housing demand, adding to pressure on an economy already grappling with weak consumer confidence and structural imbalances.

With growth showing signs of resilience but domestic demand remaining fragile, Beijing faces the challenge of sustaining economic momentum while limiting its reliance on exports.