After the Fed's jumbo cut, China surprisingly maintains its benchmark lending rates unchanged.

• On Friday, China maintained its main benchmark lending rates during the monthly fixing.
• The PBOC announced that it would maintain the one-year LPR at 3.35% and the five-year LPR at 3.85%.
• Market watchers polled by Reuters had expected the rates to be trimmed.

On Friday, China maintained its main benchmark lending rates during the monthly fixing.

According to a Reuters poll of market watchers, the Federal Reserve's 50 basis point rate cut allowed China more flexibility to lower its domestic borrowing costs without causing a significant decline in the yuan.

The PBOC announced that it would maintain the one-year LPR at 3.35% and the five-year LPR at 3.85%.

In China, the one-year LPR influences both corporate and household loans, while the five-year LPR serves as a benchmark for mortgage rates.

The reduction in interest rates in the US has given China more financial freedom to reduce its debt burden on consumers and businesses, allowing it to increase investment and spending.

In July, China surprised the markets by reducing major short and long term lending rates in an effort to stimulate economic growth, which was being hindered by a prolonged property crisis and weakened consumer and business sentiment.

In August, China's retail sales, industrial production, and urban investment all grew slower than anticipated, disappointing economists surveyed by Reuters. The urban unemployment rate increased to a six-month high, while year-on-year home prices fell at their fastest pace in nine years.

The lackluster momentum in the economy was highlighted by the disappointing economic data, prompting renewed calls for the government to implement more fiscal and monetary stimulus measures.

Several major banks have revised their predictions for China's full-year GDP growth, falling below the government's target of 5%. Bank of America has forecasted China's 2024 GDP growth at 4.8%, while Citigroup has reduced their projection to 4.7%.