China’s central bank, the People’s Bank of China (PBOC), has opted to keep its benchmark loan rates unchanged for September. This decision aligns with the recent trend of stability in the country’s economy, which has been buoyed by various policy measures.

The PBOC has decided to maintain the one-year loan prime rate, which influences most household and corporate loans in China, at its current level of 3.45%. Similarly, the five-year benchmark loan rate, which affects the majority of mortgages, remains steady at 4.2%. This move reflects the central bank’s assessment of the economic situation, which has shown signs of stabilization in recent months.

August retail sales and industrial production data, released last Friday, exceeded expectations, providing further evidence of the Chinese economy’s nascent recovery. These positive figures align with other recent data points, including inflation rates, trade volumes, and the purchasing managers index (PMI), all of which indicate an improving economic landscape.

In August, the PBOC had already reduced the one-year benchmark lending rate by 10 basis points, marking the second rate cut in three months. Surprisingly, it decided to keep the five-year benchmark lending rate unchanged during the same period. These policy moves were part of broader efforts to support economic growth and stability.

It’s worth noting that China’s loan prime rate is calculated on a monthly basis based on the proposed rates submitted to the People’s Bank of China by 18 designated commercial banks. This rate is crucial as it forms the basis for many household and corporate loans, impacting borrowing costs for businesses and individuals across the nation.

China’s decision to keep its benchmark loan rates steady for September indicates the government’s confidence in the recent signs of economic stabilization. With various policy measures already in place and positive data reinforcing the recovery narrative, the focus remains on sustaining this positive momentum and ensuring a balanced and sustainable economic growth path in the world’s second-largest economy.