The decision comes as China’s economy grew 5 per cent in the Q1 of 2026, up from 4.5 per cent in the previous quarter, placing growth at the upper end of Beijing’s revised annual target range of 4.5–5 per cent. The stronger-than-expected performance has reduced the urgency for additional monetary easing.
China held lending rates steady for an 11th month, balancing resilient 5 per cent Q1 growth with rising global risks.
Easing deflation and low borrowing costs reduce urgency for stimulus, while geopolitical tensions and higher oil prices add uncertainty.
The central bank is maintaining a supportive policy stance to sustain growth and stability.
However, rising global uncertainties, including tensions in the Middle East and higher oil prices, continue to cloud the outlook. These factors have contributed to increased energy costs and potential inflationary pressures, even as earlier deflationary trends begin to ease.
Recent data indicates a shift in price trends, with factory-gate prices rising 0.5 per cent year-on-year in March, the first increase in over three years, while consumer inflation reached 1 per cent. Despite these developments, borrowing costs remain relatively low, with average interest rates for new corporate and housing loans hovering around 3.1 per cent.
The People’s Bank of China (PBOC) has reiterated its commitment to maintaining a “supportive” and “moderately loose” monetary policy stance to sustain economic activity while ensuring currency stability. Policymakers have also emphasised the need to boost domestic demand and strengthen global economic coordination amid rising protectionism and trade uncertainties.
Fibre2Fashion News Desk (CG)
