China keeps benchmark interest rates unchanged as it grapples with weakening yuan

China left its benchmark interest rates unchanged Monday, as Beijing faces a weakening yuan while awaiting policy cues from the incoming Donald Trump administration.

The People’s Bank of China maintained the 1-year prime lending rate at 3.1% and the 5-year LPR at 3.6%, according to the People’s Bank of China statement.

The 1-year LPR determines rates for corporate loans and most household loans, while the 5-year LPR acts as a benchmark for mortgage loans.

The decision was made ahead of Donald Trump’s inauguration as the next US president on Monday.

China’s offshore yuan has lost more than 3% since Donald Trump’s victory in the presidential election in early November. The tightly controlled domestic yuan has also retreated to around a minimum of 16 months.

China’s economic activity. accelerated more than expected in the final quarter of last year, when the stimulus measures announced by Beijing since last September took effect and helped the economy meet its annual growth target.

Despite the optimistic headline figuresEconomists warned that some underlying drivers of growth could be temporary, amid weak consumer demand, a deepening housing market slump and looming tariff increases by the incoming Trump administration.

Pan Gongsheng, governor of the People’s Bank of China had indicated in September the possibility of a cut in the reserve requirement ratio, which would free up more cash for banks to lend, by the end of 2024. But the cut has not come, despite his shift toward a “moderately flexible” political stance.

The People’s Bank of China had surprised markets by cutting the main short- and long-term risks. interest rates in Julyfollowed by a widely expected 25 basis point cut in October. The central bank had kept interest rates unchanged in November and December.