China Holds Rates Steady as Growth Slows, Demand Wavers
China’s central bank kept its benchmark loan prime rates unchanged on Monday, holding the one-year rate at 3.0% and the five-year at 3.5%, despite signs of waning economic momentum.
The decision follows second-quarter GDP data showing 5.2% annual growth — slower than Q1 but slightly above forecasts.
June retail sales missed expectations, climbing just 4.8% year-over-year, down from 6.4% in May. Weak consumer spending and fragile confidence continue to weigh on recovery prospects.
HSBC’s Frederic Neumann said the People’s Bank of China appears in no rush to ease further, citing limited room for rate cuts and a preference for targeted fiscal support. He noted that policymakers may wait for more clarity on the impact of U.S. trade tariffs before acting.
Meanwhile, Nomura analysts warned of a looming “demand cliff” in the second half of 2025, driven by export weakness and potential asset price declines. They expect China’s growth to dip to around 4% in H2 and anticipate new stimulus measures before year-end.
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