China Holds Key Lending Rates Steady Amid Economic Slowdown

China's central bank maintained its benchmark lending rates for the fourth consecutive month, leaving the one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5%. The decision follows the People's Bank of China's (PBOC) recent pause on adjusting its seven-day reverse repo rate, despite the Federal Reserve's 25-basis-point cut earlier.

Economic indicators from August revealed softening momentum, with retail sales growth cooling to 3.4% and industrial output slowing to 5.2%—the weakest reading in a year. Consumer prices declined more than expected, while producer prices continued their nearly three-year deflationary trend. Exports grew by 4.4%, though at the slowest pace since February, hampered by fading early shipment gains and U.S. trade restrictions.

Barclays economists noted a pronounced weakening in Q3 economic activity, citing a deepening real estate slump, dwindling fiscal stimulus, and tighter industrial capacity controls. The PBOC's last rate cut occurred in May, a 10-basis-point reduction aimed at bolstering growth.