China Holds Key Lending Rates Steady Amid Mixed Economic Signals

The People's Bank of China maintained its one-year loan prime rate at 3.0% and the five-year LPR at 3.5%, signaling cautious monetary policy as economic growth shows signs of moderation. Second-quarter GDP expanded 5.2% year-on-year, slightly exceeding forecasts but decelerating from Q1's 5.4% pace.

Retail sales growth disappointed in June, rising just 4.8% compared to 6.4% in May and missing Reuters' consensus forecast of 5.4%. The offshore yuan remained stable at 7.179 against the dollar following the announcement, reflecting market expectations of policy continuity.

HSBC's Frederic Neumann observed limited urgency for additional rate cuts given growth above target levels. 'With interest rates already at historic lows, fiscal measures may prove more effective than monetary easing for stimulating demand,' he told CNBC. The central bank appears to be preserving policy flexibility for potential future challenges.