China is expected to leave benchmark lending rates unchanged for a seventh consecutive month in December, a Reuters survey showed, despite a depressed economy and deepening woes in the property sector.

Analysts say China's central bank is not in a hurry to loosen monetary policy as the economy is on track to meet this year's growth target and banks are grappling with record-low margins, but fresh interest rate cuts are likely in early 2026.

All 25 respondents in a Reuters survey this week said they expected the one-year and five-year loan prime rates to remain steady on Monday at 3.0 percent and 3.5 percent, respectively.

The consensus comes after the People's Bank of China this month kept its seven-day reverse repo rate unchanged at 1.4 percent. The key policy rate underpins LPRs.

China's economy stalled in November, with factory output and retail sales growth slowing as a lingering property crisis hit consumer and business sentiment.

Although China's trade surplus topped US$1 trillion (HK$7.8 trillion) in the first 11 months of 2025, exporters face a challenging 2026 amid heightened trade tensions.

A bank trader in Shanghai said further cuts in lending rates would squeeze banks' net interest margins, which are already at a record low of 1.42 percent.

"A cut in LPR now would mean a reduction in mortgage rates at the start of next year, which would make life more difficult for banks," said the banker, who declined to be named.

Moreover, policymakers are in no hurry to cut rates as the world's second-largest economy is on track to reach Beijing's growth target of around 5 percent for 2025, say economists, who predict easing next year.

Citi analysts expect China to resume policy easing as early as January 2026, while ING expects a fresh wave of support "in the early months of next year."

China Post Securities said Beijing may reduce rates by 20 basis points in the first half of next year, while Citic Futures forecast 10-20 basis-point cuts in 2026.

LPRs, normally charged to banks' top clients, are calculated each month after 20 designated commercial banks submit proposed rates to the PBOC.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

REUTERS

China set to keep rates steady for seventh month despite slowing economy