SHANGHAI (Reuters – China’s benchmark lending rate is likely to remain steady at 0.5% for the 18th consecutive month, according to a Reuters survey. This comes despite mounting economic pressure.

Snap poll results showed that 19 traders and analysts (or 95% of the 20 respondents) predicted no changes in either the 1-year Loan Prime rate (LPR), or the 5-year tenor. This was after the People’s Bank of China kept its interest rates on medium-term loans the same last week.

The one remaining respondent expected a 5 basis point cut to the 1-year LPR. However, they did not expect any change in the 5-year tenor which is used to determine the price of mortgages.

The current one-year LPR rate is 3.85% and the 5-year rate is 4.65%.

China’s economy grew 4.9% during the July-September quarter compared to a year ago, according to data released Monday. This was its lowest pace since the third quarter 2020.

The 2nd-largest country in the world has been struggling to overcome power shortages which have affected its factories, and also caused problems with its property sector.

Market expectations were high for a stable LPR fix in October. The PBOC rolled over matured medium-term loans last Friday, and their interest rates remained unchanged.

Capital Economics economists stated in a note that the MLF interest rate is a benchmark for LPR quotes from commercial banks.

“The PBOC kept the market interbank rate broadly stable lately, so commercial banks have little incentive to decrease their lending rates.” They stated that the LPR will remain unchanged for this month, adding that a reduction to the 5-year LPR would help support housing demand.

LPR can be derived from the interest rate of the medium-term loan facility (MLF), and traders and analysts agree that an adjustment in LPR should reflect changes to MLF borrowing costs.

Sun Guofeng from the central bank’s monetary-policy department stated that China’s liquidity system will remain essentially balanced during the fourth quarter. There would not be any large fluctuations. The PBOC, however, would continue its normal monetary strategy which is flexible, specific, and appropriate.

LPR stands for the lending reference rate, which is set each month by 18 banks.

Selected participants were contacted via private messaging platforms to collect all 20 responses.