FX.co ★ China Holds LPR Rates at Record Lows for 14th Month

The People’s Bank of China left its key lending rates at record lows for a 14th consecutive month in July 2026, in line with market expectations. The decision underscored policymakers’ caution over the potential fallout from the conflict in the Middle East. It came as Q2 GDP growth slowed to its weakest pace since Q4 2022, even as exports remained buoyed by robust AI-related demand. The one-year loan prime rate (LPR)—the benchmark for most corporate and household borrowing—was kept at 3.0%, while the five-year LPR, which serves as the main reference for mortgage rates, stayed at 3.5%.

Inflationary pressures on both consumers and producers persisted, driven by higher energy costs and supply chain disruptions linked to the Middle East conflict. In credit markets, yuan lending in June increased compared with May, but the pace of expansion was slower than in June a year earlier. At the same time, housing prices continued to decline in June, highlighting ongoing weakness in the property sector.