China Set To Hold Lending Rates Steady For 17th Month As GDP Growth Rebounds

China is expected to keep its benchmark lending rates unchanged for a 17th consecutive month in October, as stronger-than-expected economic growth reduces the immediate need for fresh monetary stimulus. All 22 participants in a Reuters survey expect the People's Bank of China (PBOC) to maintain rates at its review on Tuesday, October 20.

The one-year loan prime rate (LPR), which influences corporate and household borrowing costs, is expected to remain at 3.00 per cent, while the five-year LPR, a key reference for mortgage lending, is projected to stay at 3.50 per cent. The rates have remained unchanged since May 2025.

The LPR is calculated monthly based on submissions from 20 designated commercial banks and serves as a benchmark for lending rates charged to borrowers.

China's economy grew 4.5 per cent year-on-year in the July-September quarter, accelerating from 4.3 per cent in the previous quarter and exceeding economists' expectations. The recovery was largely driven by robust exports and industrial activity, helping Beijing move closer to its full-year growth target of 4.5-5 per cent.

September data showed industrial production rising 5.5 per cent year-on-year, while retail sales increased by just 1.1 per cent, highlighting the uneven nature of the recovery.

Market participants believe China could achieve its annual growth target without additional large-scale stimulus, supported by earlier policy measures and strong export performance. However, analysts have warned that reliance on overseas demand is deepening structural imbalances as household consumption and private investment remain subdued.

China's prolonged property market downturn continues to weigh on economic confidence. New home prices declined again in September, extending a slump that has lasted more than three years and indicating that existing support measures have yet to generate a broad-based housing recovery.

Fixed-asset investment fell 7.2 per cent during the first nine months of 2026, reflecting persistent weakness in investment activity. Meanwhile, China's long-term government bond yields have hovered near a 15-month low, signalling continued concerns about the economic outlook.