China kept its benchmark lending rates unchanged for the fourth consecutive month in September, in line with market expectations, following the central bank's decision to hold a main policy rate steady last week.

The steady loan prime rate fixings reflect the authorities cautious approach to monetary easing amid easing Sino-U.S. trade tensions, resilient exports and a recent stock market rally, despite signs of a domestic slowdown and monetary easing by the Federal Reserve.

BY THE NUMBERS

The one-year LPR was kept at 3.0 percent on Monday, while the five-year LPR was unchanged at 3.5 percent.

In a Reuters survey of 20 market participants conducted last week, all participants predicted no change to either of the two rates despite a recent spate of weak economic data.

CONTEXT

China's central bank left the seven-day reverse repo rate, which now serves as the main policy rate, unchanged last week.

Recent data showed factory output and retail sales in August recorded their weakest growth since last year, highlighting economic headwinds and slowdown in the domestic economy.

U.S. President Donald Trump said he and Chinese President Xi Jinping made progress on a TikTok agreement and would meet face-to-face in six weeks in South Korea to discuss trade, illicit drugs and Russia's war in Ukraine.

China's stock market has been on a tear, with the benchmark Shanghai Composite Index hovering near 10-year highs.

KEY QUOTES

Barclays

"The highly anticipated stimulus may disappoint if tariff truce holds.

"On monetary policy, we expect the PBOC to deliver a 10-basis-point cut in policy rate and LPR, and 50-basis-point cut in reserve requirement ratio in Q4."

Societe Generale

"The next event to watch for domestic policy is the upcoming fourth plenum in October, where policymakers will review the proposals of the 15th Five-Year Plan.

"As for People's Bank of China policy, we still see the need for interest rate and RRR cuts (10bps and 50bps, respectively) in Q4."

REUTERS

China keeps lending rates unchanged in Sept as trade tensions ease