China Maintains Lending Rates as Fed Cuts It

Beijing — The People's Bank of China (PBOC) maintained its benchmark lending rates stable on Monday, leaving the one-year loan prime rate at 3.0% and the five-year rate at 3.5%. The action followed weeks ago when the U.S. Federal Reserve reduced its key rate by 25 basis points.

This is the fourth straight month that China has kept its rates unchanged. Economists explain the move as Beijing's cautious approach, as recent figures indicate retail sales sliding to 3.4% in August, industrial output softening to 5.2%, and consumer prices declining more than anticipated. Deflation of wholesale prices also persists for a third year.

In spite of indications of economic weariness, policymakers seem unwilling to introduce strong stimulus, particularly following a stock market rally that lifted investor optimism. Punters anticipate minimal easing towards the end of the year as a means of assisting Beijing in achieving its 5% annual rate of growth. Projections indicate minor reductions in lending and policy rates, and a cut in reserve requirements by banks.