The People’s Bank of China (PBOC) building in Beijing, China, on Tuesday, April 18, 2023.<\/p>\n
Bloomberg | Getty Images<\/p>\n
China’s central bank kept its benchmark lending rates unchanged Tuesday as authorities navigate a balancing act of supporting a slowing economy while maintaining currency stability. <\/p>\n
The People’s Bank of China held its 1-year and 5-year loan prime rates at 3% and 3.5%, respectively, keeping them steady for a tenth straight month despite stuttering economic growth. <\/p>\n
The 1-year rate serves as the benchmark for most new and outstanding loans, while the 5-year level influences mortgages. <\/p>\n
The world’s second-largest economy showed signs of slowing down in the final quarter of last year, expanding 4.5% year on year<\/a>, its slowest pace since the country lifted its stringent Covid curbs in late 2022. <\/p>\n Chinese authorities have struggled to lift the economy out of an entrenched deflation as consumers cut back spending amid a prolonged real estate downturn, a bleak job market and uncertain income prospects. <\/p>\n Retail sales growth fell to a 3-year low of 0.9% in December while the GDP deflator \u2014 a metric that shows changes in prices of goods and services \u2014 has stayed negative for 11 consecutive quarters<\/a>. <\/p>\n Policymakers have turned to promoting the consumption of services<\/a> to boost overall spending, betting that elderly care services, leisure and tourism can help make up for the tepid demand in goods. <\/p>\n The Chinese yuan has continued to appreciate in recent months, with the offshore yuan<\/a> strengthening from around 6.974 per U.S. dollar at the start of the year to 6.889 Tuesday morning, according to LSEG data. <\/p>\n The PBOC in recent weeks has signaled some tolerance for a gradual strengthening in its currency, with the dollar’s weakness paving the way for the yuan to extend its advance. <\/p>\n