Beijing/Shanghai, Aug 20 (V7N) – China is likely to keep its key lending rates unchanged for the third consecutive month in August, according to a Reuters survey of 23 market analysts. Despite signs of economic slowdown, experts anticipate that the central bank will refrain from broad monetary easing, instead opting for sector-specific structural policies to bolster growth.
 
The People's Bank of China (PBOC) is expected to hold both the one-year and five-year Loan Prime Rates (LPR) steady when they are set on Wednesday. The one-year LPR affects most business and personal loans, while the five-year LPR is used primarily for mortgage lending. Both rates were last reduced by 10 basis points in May.
 
Analysts from Citi and other institutions have dismissed the possibility of large-scale stimulus, predicting instead a shift in focus toward targeted economic support in the second half of 2025. “We don’t expect a ‘bazooka-style’ stimulus,” Citi noted, “while structural policies could be a more important venue for the PBOC in the next few months.”
 
The call for restraint comes despite troubling signs in July’s credit data. New yuan loans declined for the first time in two decades, significantly missing forecasts. However, a rebound in broader credit metrics has given the central bank room to pause further easing.
 
In its latest quarterly monetary policy report, the PBOC pledged to maintain a moderately accommodative stance. It emphasized the use of structural tools to support innovation, consumption, small businesses, and foreign trade amid ongoing economic uncertainty.
 
The PBOC is also navigating pressure from Beijing’s ongoing “anti-involution” campaign—an effort to address industrial overcapacity and reduce deflationary risks. While monetary policymakers remain cautious, they appear determined to target support where it's most needed without triggering excess liquidity or market distortions.
 
END/WD/SMA/