Shanghai, June 18 - China is widely expected to leave its benchmark loan prime rates (LPR) unchanged at the upcoming review, according to a recent market survey, extending a run of steady rates into a 13th consecutive month.
In a poll of 30 market participants conducted this week, every respondent predicted that at the next review on Monday the one-year and five-year LPRs would stay at 3.00% and 3.50%, respectively. The one-year LPR is commonly applied to banks' most creditworthy clients and is set each month following rate proposals from 20 designated commercial banks submitted to the People’s Bank of China (PBOC).
The strong consensus on unchanged fixings comes against a backdrop of a bifurcated recovery. Recent data show a K-shaped divergence in the broader economy, with factories supported by unexpectedly resilient exports while domestic demand has deteriorated amid a multi-year downturn in the property sector.
Commenting on that split, Henry Hao, senior China economist at Commerzbank, said: "Despite the imbalance between robust factory supply and deteriorating domestic demand, Beijing is showing patience." He added: "With housing wealth effects still muted and the labour market recovering slowly, policymakers appear reluctant to unleash domestic stimulus, signalling that the economy will likely continue its uneven, export-reliant trajectory without significant near-term intervention until Q3."
At the same time, the central bank appears to be intensifying its influence over short-term money markets. Officials are tying overnight borrowing costs more closely to the PBOC's seven-day reverse repo rate, which serves as the primary policy benchmark for short-term liquidity.
PBOC Governor Pan Gongsheng told the annual Lujiazui Forum that the central bank will "increase the variety of overnight reverse repo operations and optimise operations for its temporary overnight repo and reverse repo agreements to better manage short-term liquidity conditions." Those adjustments aim to refine liquidity management rather than constituting a direct monetary easing.
Supporting that interpretation, Citi analysts said: "The tweak doesn’t amount to an outright easing step." They added: "We still expect a symbolic 10 basis-point rate cut in the second half of this year, with risks skewed to earlier, given the weak domestic demand."
The combination of steady LPR expectations, targeted short-term operations, and official caution on stimulus suggests policymakers are prioritising stability while monitoring uneven signals across manufacturing, exports, the property sector and the labour market. How long that balance will hold depends on incoming data and whether domestic demand shows meaningful improvement before the third quarter.
Summary: Market participants expect the one- and five-year LPRs to remain at 3.00% and 3.50% at the next review, as policymakers balance export-driven growth with weak domestic demand and adjust short-term liquidity tools rather than deploying broad stimulus.