China Seen Holding July 21 LPR Steady at 3.45%, 3.95% in Reuters Poll

According to a Reuters survey of market analysts, China is anticipated to maintain its benchmark lending rates unchanged during the monthly fixing on July 21, 2025. All 20 respondents in the survey expect the one-year loan prime rate (LPR), which influences most new and outstanding loans, to remain at 3.45%, and the five-year LPR, which impacts mortgage pricing, to stay at 3.95%. This decision aligns with the People's Bank of China's (PBOC) recent actions, including holding the medium-term lending facility (MLF) rate steady amid moderate economic recovery and persistent challenges.

The rationale for preserving current rates includes China's second-quarter gross domestic product (GDP) growth of 5.2% year-on-year, which surpassed market forecasts but highlighted underlying weaknesses such as subdued domestic demand and a protracted property sector downturn. New home prices declined fastest in eight months during June 2025, underscoring difficulties in stimulating real estate activity despite prior support measures. Additionally, escalating uncertainties from potential U.S. tariffs contribute to a cautious monetary stance, as the PBOC seeks to balance growth support with financial stability. Lynn Song, Chief Economist for Greater China at ING, noted that while downward price pressures and sluggish loan demand justify further easing, the PBOC may defer action to a more suitable juncture, forecasting one additional 10-basis-point rate reduction and a 50-basis-point cut in the reserve requirement ratio before the end of 2025.

Attention is shifting to the forthcoming Politburo meeting, expected in late July 2025, which will likely delineate economic policy priorities for the remainder of the year. Analysts at Goldman Sachs anticipate that, given solid first-half GDP performance, policymakers will refrain from implementing broad-based stimulus at this gathering, opting for incremental and targeted interventions to address the property market slump and labor market strains. This meeting holds particular significance amid projections of China's full-year GDP growth cooling to 4.6% in 2025, falling short of official targets, and further decelerating to 4.2% in 2026.

As of July 18, 2025, these developments reflect China's strategic emphasis on calibrated policy adjustments to navigate domestic and external economic pressures without exacerbating financial risks.

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