China left benchmark lending rates unchanged at a monthly fixing on Monday, in line with market expectations.
The property rescue plan effectively reduced the urgency to further cut benchmark lending rates, at a time aggressive monetary easing could pile additional pressure on the weakening currency.
The one-year LPR was kept at 3.45 per cent, while the five-year LPR was unchanged at 3.95 per cent.
In a Reuters survey of 33 market participants conducted last week, 27 expected both rates to stay unchanged.
China would cut interest rates of mortgage loans and down-payment ratios for homebuyers to boost lacklustre property demand, according to statements released by the central bank on Friday.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
China’s central bank left a key interbank interest rate unchanged when rolling over maturing medium-term loans last week, and drained some cash from the banking system through the bond instrument.
New bank lending in China fell more than expected in April from the previous month, while broad credit growth hit a record low, official central bank data showed.
“Given the strength of the recent supportive policy roll-out, the odds of further monetary policy easing in the coming months to support these efforts have risen,” economists at ING said.
They expect one or two cuts to the LPR this year, along with a further reserve requirement ratio cut.
