BEIJING, CHINA – NOVEMBER 11: The Chinese flag flies in front of the People’s Bank of China (People’s Bank of China) headquarters on November 11, 2025 in Beijing, China. The People’s Bank acts as the country’s central bank, overseeing monetary policy, financial regulation, and currency issuance. (Photo by Chen Xin/Getty Images)
Chen Xin | Getty Images News | Getty Images
The People’s Bank of China on Monday kept its loan prime rate unchanged despite the world’s second-largest economy’s weak economic data and prolonged slump in its real estate sector.
The People’s Bank of China kept its one-year and five-year loan prime rates unchanged at 3% and 3.5%, respectively, for the seventh consecutive session, according to a Reuters poll.
The one-year rate serves as a benchmark for new loans, and the five-year rate helps lock in your mortgage rate.
The People’s Bank of China’s decision comes amid lackluster economic indicators for China in November, including lower-than-expected retail sales and industrial production.
Retail sales rose 1.3% last month from a year earlier, well below the Reuters median estimate of 2.8% growth and slowing from the previous month’s 2.9% rise.
Industrial production also fell short of expectations, rising 4.8% in November compared to expectations for a 5% increase year-on-year, the slowest growth since August 2024.
China continues to be reeling from a prolonged recession in its real estate sector. Investment in fixed assets, including real estate, fell 2.6% in the January-November period from a year earlier, much smaller than the 2.3% decline expected by economists.
New home prices also continued to decline in November, demonstrating the persistent weakness in China’s real estate sector.
In first-tier cities such as Beijing, Guangzhou and Shenzhen, new home prices fell by 1.2%, while existing home prices fell by 5.8% from the previous year.
When asked about the central bank’s seven-month suspension of monetary policy, Eswar Prasad, a professor of trade policy and economics at Cornell University, told CNBC that “some stimulus would be helpful,” but added that with the private sector in decline, “monetary policy probably won’t get as much traction.”
“As growth momentum weakens, we’re going to need some stimulus, probably some monetary stimulus, and ideally a bit more fiscal stimulus, but that really needs to be packaged with broader reforms,” Prashad said.
Earlier this month, China’s Ministry of Finance announced plans to issue super-long-term special bonds next year to finance the construction of major projects and new infrastructure projects.
Policymakers also vowed to “strongly support the implementation of special measures to boost consumption” as the country battles deflationary pressures.
But an interim trade deal with the United States that includes an end to exorbitant tariffs on Chinese exports could still help China meet its 2025 economic growth target of “about 5%” as prospects for increased exports to the United States grow.
Mainland China’s CSI300 index rose 0.43% on Monday. The onshore yuan was flat against the dollar at 7.04 yuan, while the offshore yuan fell slightly, trading at 7.03 yuan against the dollar.
—CNBC’s Anniek Bao and Dan Murphy contributed to this report.
