China"s central bank, the People"s Bank of China (PBOC), has decided to keep its major benchmark lending rates unchanged as the government evaluates the impact of recent stimulus measures.
The 1-year loan prime rate (LPR) will remain at 3.1%, while the 5-year LPR is set at 3.6%. This decision aligns with market expectations, as analysts had predicted no immediate changes to the lending rates this month.
The PBOC"s decision follows a previous cut of 25 basis points to both the 1-year and 5-year LPRs last month.
The government has introduced a substantial 5-year fiscal package worth 10 trillion yuan to address local government debt issues, signaling potential additional economic support in the coming year.
Despite these efforts, analysts project that China"s economic growth will slow to around 4% over the next two years due to a deflationary environment and escalating trade tensions.
However, Goldman Sachs maintains an "overweight" stance on Chinese equities, forecasting a 13% upside for the benchmark CSI 300 index in the coming year.
The future trajectory of China"s economy will depend on the interplay between domestic economic conditions and external factors such as trade relations.