China's Key Lending Rates Kept Unchanged as PBOC Weighs Reforms

Major Chinese banks kept their key lending rates unchanged, where they have been since May of last year as authorities give fiscal expansion a bigger role in bolstering growth.

China's one-year loan prime rate remained at 3.0% and the five-year rate at 3.5%, according to data released Tuesday by the People's Bank of China.

Tuesday's decision follows signals from China's central bank that it will continue to reform the country's monetary policy framework, further elevating shorter-term rates to better guide markets.

In a speech delivered Monday, PBOC Gov. Pan Gongsheng said financially stronger companies may eventually be allowed to choose between the interbank overnight repo rate, known as DR001, and the loan prime rates as the pricing benchmark for floating-rate loans.

Pan said some financial institutions have already reached agreements with clients to adopt the overnight rate for loan pricing.

The LPR can continue to serve as the pricing benchmark for small business and personal loans, and the interbank overnight repo rate may also be considered an optional pricing benchmark for bonds and financial derivatives, Pan said.

The PBOC will study switching the tenor of its main open-market operations to overnight at an appropriate time, said Pan, according to a statement late Monday.

Pan said the interbank overnight repo rate had effectively become the target rate for monetary policy, while the central bank's main open-market operations and formal policy rate remained seven-day. Aligning the two would improve the precision of interest-rate regulation, he said.

Pan also outlined measures to support the yuan's international use, including providing more stable yuan liquidity to offshore markets and allowing eight yuan clearing banks to conduct proprietary trading in China's onshore interbank foreign-exchange market.

Write to Singapore Editors at singaporeeditors@dowjones.com

(END) Dow Jones Newswires

October 19, 2026 21:52 ET (01:52 GMT)