China holds rates
- China held its benchmark lending rates, signalling officials see recent growth as durable enough to delay easing. - The People’s Bank left the one-year loan prime rate at 3.45% and the five-year at 3.95%. - Beijing’s hold reflects caution because trade with Iran and Gulf states has plunged amid Strait of Hormuz disruptions (cnbc.com) (scmp.com).
China left its benchmark lending rates unchanged on April 20, extending a pause in monetary easing as first-quarter growth held up. (reuters.com) The one-year loan prime rate stayed at 3.00% and the five-year rate, which guides many mortgages, stayed at 3.50%. Reuters reported the move was widely expected and marked the 11th straight month without a cut. (reuters.com) China’s National Bureau of Statistics said gross domestic product grew 5.0% in the first quarter from a year earlier. The bureau said retail sales rose 4.6% and industrial output climbed 6.5% in the quarter. (stats.gov.cn) Inflation also firmed in March after a long stretch of weak prices. China’s Consumer Price Index rose 1.0% from a year earlier, while Reuters said factory-gate prices increased for the first time in more than three years. (stats.gov.cn) (reuters.com) The hold comes as Beijing weighs stronger domestic data against a new external shock in the Middle East. China lowered its 2026 growth target in March to a range of 4.5% to 5%, the lowest such target in decades, before the Strait of Hormuz crisis deepened. (cnbc.com 1) (cnbc.com 2) Trade figures now show that shock hitting China’s energy corridor. South China Morning Post reported on April 20 that China’s March imports from Iran fell 48% from a year earlier and exports to Iran dropped 90%, while exports to eight Gulf economies fell 57% and imports from them declined nearly 33%. (scmp.com) The strait is the only sea route out of the Persian Gulf, and it normally carries about a quarter of seaborne oil and a fifth of liquefied natural gas, according to South China Morning Post. CNBC reported last week that the U.S. naval blockade and Iran’s response had already sent oil prices sharply higher. (scmp.com) (cnbc.com) Beijing still has reasons to keep easing options open. Reuters reported that official March housing data showed new-home prices were still falling from a year earlier, even as some big cities improved month to month. (reuters.com) For now, policymakers are treating stronger growth and firmer prices as enough reason to wait. The next question is whether the Hormuz disruption stays brief enough for China to keep rates on hold into the summer. (reuters.com) (scmp.com)
