The five-year LPR, linked to mortgage costs, also remained at 3.5% in line with expectations.

Policy makers signaled a cautious stance, prioritizing stability and structural support over broad rate cuts amid mixed growth and subdued domestic demand.

Authorities are promoting services such as elder care, leisure, and tourism to lift consumption and offset weaker goods demand.

The central bank may use tools like reserve requirement ratio cuts or targeted support for green projects and tech innovation if stimulus becomes necessary.

Earlier moves last year included rate and RRR reductions to spur growth, but current policy emphasizes targeted measures rather than broad rate cuts.

China’s central bank kept the LPR steady, with the 1-year rate at 3.0% and the 5-year rate at 3.5% for the ninth straight month as the economy slows.

A stronger yuan could pressure exporters facing tariffs and global competition, influencing China’s export-driven economy.

Analysts see potential yuan targets and debate whether Beijing will ease currency stability goals later in the year.

China’s retail growth slowed in December, with deflationary pressure reflected in a negative GDP deflator for multiple quarters.

The hold is viewed as a strategic pause to maintain long-term stability without broad-based stimulus.

Some economists warn that future LPR cuts could squeeze bank profitability due to thin net interest margins.

Domestic indicators show a mixed landscape: modest manufacturing growth, ongoing housing weakness, and inflation near comfort levels, supporting a cautious stance and use of targeted liquidity tools.