China Likely to Hold Rates Steady as Growth Surprises on the Upside

Reuters and Bloomberg contributed to this report.

China’s central bank looks set to stay put again.

After a stronger-than-expected start to the year, policymakers at the People’s Bank of China are expected to keep benchmark lending rates unchanged this month, marking an 11th straight hold.

A Reuters survey shows broad consensus: the one-year loan prime rate should remain at 3.00%, while the five-year rate – a key reference for mortgages – is likely to stay at 3.50%. No surprises, at least for now.

The shift in expectations comes down to momentum. China’s economy grew 5.0% in the first quarter, up from 4.5% previously and right at the top end of Beijing’s annual target. That’s solid enough to ease pressure on policymakers who, not long ago, were being urged to step in with more stimulus.

Even before the GDP numbers landed, there were signs the world’s second-largest economy was holding up better than many had feared, despite the ongoing Iran war rattling global markets. That resilience has prompted major banks to rethink earlier calls for rate cuts this year.

Inflation trends are also nudging policymakers toward caution. Factory-gate prices turned positive in March for the first time in over three years – a signal that cost pressures are creeping back, partly tied to higher import prices from the Middle East.

Put it together, and the case for cutting rates starts to look thinner.

Economists say the central bank is more likely to stick with targeted tools instead of broad rate moves. That’s been the playbook for a while – fine-tuning liquidity through reserve requirement tweaks or selective support, rather than pulling the big lever.

Officials have already signaled they want to keep policy “appropriately loose,” but not overly aggressive. Growth is holding. Inflation is stirring. There’s no urgency to act.

For now, the message is simple: steady hands, wait and see.