China keeps key lending rates unchanged despite slowing growth

China’s central bank left its benchmark lending rates unchanged on Tuesday, maintaining a cautious policy stance despite signs that economic growth has continued to slow.

The People’s Bank of China kept the one-year loan prime rate at 3% and the five-year rate at 3.5%, extending an eight-month pause in rate cuts. The one-year rate guides most corporate and household loans, while the five-year rate is used to price mortgages.

The decision comes as China’s economy lost momentum late last year. Gross domestic product grew 4.5% year on year in the fourth quarter of 2025, the slowest pace since late 2022, according to official data released earlier this week.

Consumer demand remains weak. Retail sales growth slowed to 0.9% in December, a three-year low, reflecting subdued household confidence amid a prolonged property downturn and soft job conditions.

Rather than broad rate cuts, policymakers have signalled a preference for targeted support. Last week, the central bank lowered rates on selected lending tools aimed at agriculture, small businesses and private firms, while expanding credit quotas for technology and innovation loans.

Officials have also announced steps to ease conditions in the real estate sector, including lowering minimum down-payment requirements for commercial property purchases.

China’s borrowing appetite has remained subdued. New bank lending fell to a seven-year low in 2025, adding pressure on authorities to do more to support domestic demand.

Central bank officials have said there remains room for further easing this year, including potential cuts to banks’ reserve requirement ratios and policy rates, should economic conditions worsen.