The People’s Bank of China left its loan prime rates unchanged on Thursday, keeping the one-year rate steady at 3.0% and the five-year rate, the benchmark for mortgages, at 3.5% — leaving both at their lowest levels since the benchmark was introduced in 2019.

The decision was at odds with a Reuters analysis earlier this week that had flagged a surprise cut as a live possibility, even though broad-based stimulus has historically run against Beijing’s instincts. Analysts said a surprise China LPR cut could not be ruled out this week.

The case for easing had appeared to strengthen after a run of weak data, including a July decline in industrial output, softer-than-expected retail sales, extending house-price falls, and cooling PMI readings, along with a record contraction in bank lending. Premier Li Qiang had called for stabilising external demand, which analysts said has been supported mainly by AI-related exports even as domestic consumption remained weak.

Thursday’s hold suggests policymakers are still favouring a wait-and-see approach rather than immediate monetary easing, despite the yuan’s resilience near a three-and-a-half-year high against the dollar, which gives the central bank room to absorb any depreciation pressure from a rate cut. The LPR is also not the only lever at the PBOC’s disposal: the central bank has previously used reserve requirement ratio cuts and targeted relending facilities to channel liquidity to banks and specific sectors without moving the benchmark lending rate. Market watchers still broadly expect some form of stimulus this year, but the decision reinforces expectations that any meaningful move may not come until after October’s Fifth Plenum — the Communist Party Central Committee gathering where longer-term economic priorities are typically mapped out — narrowing the window to meet this year’s growth target.

The Loan Prime Rate is China’s benchmark for domestic lending, set monthly — with the fixing published on the 20th of each month — by the People’s Bank of China based on submissions from a panel of banks, and used as the reference rate for pricing most new loans across the economy. It has two tenors: the one-year LPR, which anchors most new and outstanding corporate and household lending, and the five-year LPR, which specifically underpins mortgage pricing.

The LPR replaced the old benchmark lending-rate system in 2019 as part of China’s shift toward a more market-oriented rate-setting mechanism. In practice, however, the PBOC still heavily influences the benchmark through its Medium-term Lending Facility rate, which effectively sets the floor banks use when pricing their LPR submissions.

Both tenors were last cut on May 20, 2025, when the one-year LPR was lowered to 3.0% and the five-year LPR to 3.5%. Since then, the PBOC has kept both rates unchanged at every monthly fixing, with July 2026 marking the 14th consecutive month without a move. That makes Thursday’s decision roughly 15 months since the last change if rates hold again, or the first cut in that stretch if the surprise move discussed in the note materialises.