SHANGHAI, (Reuters) – China surprisingly maintained its benchmark lending rate steady Wednesday. Markets saw this as Beijing’s prudent approach to rolling out additional easing measures in light of slowing the economy due to COVID-19 lockdowns.

China, unlike most countries that tighten their monetary policies in an effort to counter inflation, has increased its easing efforts to offset the slowdown.

This policy divergence could lead to capital flight, which would increase the pressure on yuan.

The LPR for a one-year loan was maintained at 3.7%, and it was the same as for a five-year loan at 4.60%.

Marco Sun from MUFG Bank’s chief financial market analyst said the policy gap between China and America was likely continue despite the fact that LPR in April had been steady. This is because the PBOC’s policy stance seemed more dovish.

Sun stated that “Recovery of COVID” is an extremely difficult task for policymakers around the world, and added that it remains unclear what the economic consequences will be from this latest round of COVID-19 infected.

Sun sees an opportunity to reduce the LPR during the second quarter.

In a snap Reuters survey, a large majority of traders and analysts surveyed expected a month’s decrease. 11 of them (39%) predicted a 5 basis point reduction in the rates.

The PBOC last week lowered the amount of cash banks must set aside as reserves by a smaller-than-expected margin to provide a relatively modest cash injection.

Goldman Sachs, one of the world’s largest investment banks (NYSE:), said that the PBOC may be restrained because they are concerned about inflation and the U.S. Federal Reserve’s aggressive monetary tightening.

Additionally, market participants suggested that banks may have resisted lowering their lending standards because of recent strong credit growth.

“The unmoved LPR indicates that loan demand is not now bad in banks’ views,” stated Xing Zhaopeng (an ANZ senior China strategist).

He said that “we may have to be patient to observe more credit information.” LPR could still lowered in this year’s credit growth deterioration, even if the PBOC does not want to reduce medium-term lending facilities (MLF), which acts as a guide for the LPR.

The March increase in China bank lending was more than forecast, and credit growth was faster than in the prior month.

China’s one-year LPR rate is used for most new and existing loans. Pricing of mortgages is affected by the five-year LPR.