China left benchmark lending rates unchanged for the 12th consecutive month in May, in line with market expectations.
WHY IT MATTERS
Ample interbank liquidity and the tone of the PBOC's quarterly report suggest policymakers are in no rush to cut rates, despite lingering softness in economic activity and lending.
BY THE NUMBERS
The one-year LPR was kept at 3.00%, while the five-year LPR remained at 3.50%. All 20 participants in a Reuters survey predicted no change.
CONTEXT
The seven-day reverse repo rate, the anchor for LPR pricing, has stayed unchanged this year. China's economic growth lost momentum in April, with industrial output cooling and retail sales falling to more than three-year lows.
KEY QUOTES
TD Securities: The PBOC may be hesitant to cut rates after the surge in producer prices. We expect targeted fiscal stimulus from Beijing.
Huatai Securities: The central bank added the phrase "targeted and effective" to its policy stance, signaling a weaker case for broad-based easing.
