People's Bank of China, Base interest rate frozen... Economic stimulus cautious mode maintained

The People's Bank Of China continued its prudent monetary policy by freezing the Loan Prime Rate (LPR) as expected by the market. The People's Bank announced that it would maintain the July LPR at 3.00% for a 1-year term and 3.50% for a 5-year term, respectively. This rate serves as the de facto benchmark rate in China, directly affecting the loan and real estate markets.

This interest rate freeze is interpreted as a measure conscious of fears of a weakening yuan and capital outflows, despite recent poor economic indicators and a slump in the real estate market. Especially in the context of the widened interest rate gap with the United States, the People's Bank seems to be focused on managing liquidity and responding to the economy through structural measures rather than additional interest rate cuts.

The market is focused on whether there will be additional stimulus measures by the Chinese government in the second half of the year and their intensity.