China keeps benchmark lending rates steady as Fed signals fewer cuts ahead

China kept its main benchmark lending rates unchanged on Friday, as Beijing faces the challenge of bolstering economic growth while backstopping a weakening yuan.

The People’s Bank of China said it would steady the one-year loan prime rate at 3.1%, with the five-year LPR at 3.6%. The 1-year LPR affects corporate and most household loans, while the 5-year LPR serves as a reference for mortgage rates. The move was expected according to a Reuters poll of 27 economists.

The rate decision came on the back of a widely-expected 25-basis-points rate cut by the U.S. Federal Reserve on Wednesday. The Fed also indicated it will only reduce interest rates twice in 2025, fewer than the four cuts in its September meeting’s projection.

Analysts said the Fed’s revised outlook on future rate cuts is unlikely to have a huge influence on the trajectory of policy easing by China’s central bank, although it could put pressure on the Chinese yuan.

Earlier this month, Chinese top officials pledged at top economic agenda-setting meetings to ramp up monetary easing measures, including implementing interest rate reductions, to shore up the ailing economy.

The PBOC kept the one-year and five-year LPRs unchanged in November, following a widely-anticipated 25bp-cut in October. The central bank had surprised the markets by shaving the major short and long term lending rates in July.

“There is limited space for conventional monetary policies” due to con