Logo

China Holds Lending Rates Steady Amid Eased Trade Tensions and Growth Watch

China's central bank kept benchmark lending rates unchanged following a rate cut last month. The decision comes amid reduced trade tensions with the U.S. and cautious optimism about economic growth. Policymakers signal confidence in current strategies, with limited near-term stimulus expected and ongoing efforts to promote the digital yuan internationally.

China Holds Lending Rates Steady Amid Eased Trade Tensions and Growth Watch

China Maintains Lending Rates After Recent Cut

In a move expected by analysts, China kept its benchmark lending rates unchanged on Friday, following a notable rate cut last month. The People's Bank of China (PBOC) held the 1-year loan prime rate at 3.0% and the 5-year loan prime rate at 3.5%, signaling a cautious but stable approach amid shifting economic and trade dynamics.

Background: May Rate Cut and Trade Developments

In May, Chinese authorities implemented a rate cut of 10 basis points, the first since October, aiming to buffer the economy against ongoing trade frictions with the United States. This easing was accompanied by several commercial banks lowering deposit rates to help maintain their net interest margins.

Understanding China's Loan Prime Rates

The loan prime rate (LPR) in China serves as a key benchmark, based on rates submitted by a panel of commercial banks. The 1-year LPR primarily affects corporate and most household borrowing, while the 5-year LPR is closely tied to mortgage lending.

Trade Optimism Eases Growth Concerns

Trade tensions between China and the U.S. have somewhat subsided following a recent agreement where both sides agreed to uphold the consensus reached in Geneva in May. This includes allowing continued trade in rare earth elements and technology, and suspending certain tariff escalations. Such developments have alleviated some of the uncertainties weighing on economic growth.

Economic Outlook and Policy Adjustments

Reflecting these positive signs, leading analysts like those at Nomura have adjusted their expectations, reducing the forecasted rate cut for the last quarter of the year from 15 basis points to 10 basis points. However, they still anticipate a potential 50-basis-point reduction in the reserve requirement ratio.

Nomura economists also suggest that while immediate extensive fiscal stimulus is unlikely, China may increase policy support during the latter half of the year to counterbalance reduced proactive business activities.

Policymakers Express Confidence in Current Monetary Policy

Recent comments from Chinese officials convey a strong sense of satisfaction with the country's monetary strategy. Experts note an emerging trend to reserve interest rate adjustments and monetary easing for a supportive, rather than frontline, role while seeking alternative methods to boost growth.

Strengthening Currency and Financial Market Stability

At a prominent financial forum in Shanghai, the head of the State Administration of Foreign Exchange highlighted improved capabilities to manage foreign exchange market volatility. Meanwhile, PBOC Governor Pan Gongsheng reaffirmed China's ambition to expand the international usage of its digital yuan and advocated for a more multipolar global currency system.

Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions
Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions

Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House, emphasizing that monetary policy decisions will continue to rely on objective economic analysis rather than political influence. The central bank reaffirmed its commitment to address inflation, growth, and employment based on incoming data. Despite Trump's calls for lower rates, the Fed maintains a cautious stance amid tariff uncertainties and expects to hold rates steady for the near term.

China's Central Bank Increases Gold Reserves for Seventh Consecutive Month
China's Central Bank Increases Gold Reserves for Seventh Consecutive Month

China's central bank continued its gold buying spree in May, marking the seventh consecutive month of accumulation. Gold reserves grew to 73.83 million fine troy ounces, valued at nearly $242 billion. Despite gold prices stabilizing after an April record high, China’s purchases reflect strategic diversification away from dollar assets. Globally, central banks are expected to buy 1,000 metric tons of gold in 2025, signaling sustained confidence in bullion as a reserve asset.

Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?
Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?

European Central Bank President Christine Lagarde envisions the euro expanding its international role amid shifting geopolitical dynamics and waning confidence in the US dollar. While the dollar remains the dominant global reserve currency, the euro, accounting for about 20% of reserves, is gaining momentum. Analysts express divergent views on the euro’s potential to challenge the dollar, citing political and economic hurdles facing Europe. Despite obstacles, growing investor interest suggests the euro could strengthen further.

European Central Bank Expected to Cut Rates: What This Means for the Eurozone Economy
European Central Bank Expected to Cut Rates: What This Means for the Eurozone Economy

The European Central Bank is set to reduce its deposit facility rate to 2%, responding to steady inflation and modest economic growth in the eurozone. Additional rate cuts are anticipated throughout 2025, although the ECB is expected to adopt a cautious, flexible approach without forward guidance. These moves will impact borrowing and savings rates differently, depending on financial product types and market expectations.

European Stocks Climb Amid Middle East Concerns; UK Retail Sales Dip Sharply
European Stocks Climb Amid Middle East Concerns; UK Retail Sales Dip Sharply

European stock markets climbed on Friday with the Stoxx 600 up 0.5%, led by travel sectors, while UK retail sales dropped sharply by 2.7% in May, breaking a four-month growth streak. Public borrowing in the UK edged higher, raising economic concerns. Meanwhile, Eutelsat shares surged 11% following a €1.35 billion government-backed capital raise. Gold prices slipped slightly but remain historically strong amid ongoing geopolitical tensions.

Pakistan Maintains Cryptocurrency Ban Amid Conflicting Signals From Officials
Pakistan Maintains Cryptocurrency Ban Amid Conflicting Signals From Officials

Despite announcements about establishing a Strategic Bitcoin reserve, Pakistan's central bank and finance ministry have clarified that all cryptocurrency transactions remain illegal. Lawmakers expressed concerns over conflicting policies that encourage crypto investments despite the ban, highlighting risks to financial stability and the need for regulatory clarity to prevent illicit activities.

Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025
Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025

In 2025, central banks globally are bolstering gold holdings as a hedge against economic and geopolitical uncertainties. Nearly 95% of reserve managers anticipate growth in gold reserves, driven especially by emerging markets prioritizing gold for value preservation and portfolio diversity. Additionally, there's a notable shift towards domestic gold storage and scaling back US dollar reserves in favor of alternative currencies.

Market Outlook: Rising Trade Tensions and Economic Indicators to Watch
Market Outlook: Rising Trade Tensions and Economic Indicators to Watch

U.S. markets saw robust gains in May, led by the S&P 500 and Nasdaq, buoyed by a temporary trade truce. However, recent U.S.-China tensions resurfaced following accusations of trade deal violations and a planned increase in steel tariffs to 50%. Asian markets responded negatively, and attention now shifts to Friday's U.S. jobs report for clues about economic momentum. Meanwhile, notable corporate mergers in Australia and shifts in bond market strategies highlight ongoing financial adjustments amid geopolitical uncertainties.

European Central Bank Cuts Interest Rates as Inflation Falls Below Target
European Central Bank Cuts Interest Rates as Inflation Falls Below Target

The European Central Bank reduced its deposit facility interest rate by 25 basis points to 2% following inflation falling below the 2% target, supported by lower energy costs and a stronger euro. Inflation forecasts for 2025 were lowered to 2%, while core inflation estimates slightly increased. Despite modest economic growth of 0.3% in Q1 2025, geopolitical tensions and trade policies pose risks. The ECB indicated uncertainty in future inflation trends and left its growth forecast at 0.9%. Market reactions were measured, and the future interest rate path remains uncertain with analysts divided on further cuts.

Fed Minutes Reveal Concerns Over Inflation and Trade Policy Impact on Economy
Fed Minutes Reveal Concerns Over Inflation and Trade Policy Impact on Economy

Federal Reserve officials expressed worries that tariffs could worsen inflation, complicating interest rate decisions as economic uncertainties grow. Despite solid growth and balanced labor markets, the Fed kept rates steady between 4.25%-4.5%, opting for caution until fiscal and trade policy impacts become clearer. The minutes highlighted the need for robust policy amid evolving trade negotiations and inflation dynamics.

China Condemns US for Violating May Trade Truce, Vows Retaliation
China Condemns US for Violating May Trade Truce, Vows Retaliation

China has accused the United States of severely violating the trade truce reached in May, citing actions such as restrictions on chip software sales and visa cancellations. Both nations had agreed to reduce tariffs but recent US measures have intensified tensions. Despite these challenges, high-level talks between Presidents Xi and Trump are expected to address ongoing trade conflicts.

China Holds Lending Rates Amid Slowing Growth and Consumer Caution
China Holds Lending Rates Amid Slowing Growth and Consumer Caution

China's central bank kept lending rates steady as GDP growth slowed to 5.2% in Q2 and retail sales underperformed expectations. Analysts warn of a 'demand cliff' driven by export pressures and real estate declines, suggesting Beijing may soon need new stimulus measures to shore up the economy in the year's second half.

U.S. Firms Face Rare-Earth Magnet Crunch as Imports from China Skyrocket 660%
U.S. Firms Face Rare-Earth Magnet Crunch as Imports from China Skyrocket 660%

Following stricter export controls earlier this year, China's shipments of rare-earth permanent magnets to the U.S. skyrocketed in June by over 660%, as a tentative trade de-escalation took effect. These magnets, vital for tech sectors such as EVs and renewable energy, underscore America's reliance on Chinese supplies. However, supply chain fragility, geopolitical leverage, and the slow pace of domestic alternatives raise critical economic and policy questions about long-term technology resilience.

Shubhanshu Shukla’s Space Mission Faces Seventh Delay Without New Launch Date
Shubhanshu Shukla’s Space Mission Faces Seventh Delay Without New Launch Date

Shubhanshu Shukla’s historic trip to space aboard Axiom Mission 4 faces its seventh postponement as NASA and partners await further clearance following ISS repairs. The launch window remains open until June 30, with a backup window in mid-July. Commanded by Peggy Whitson, the mission highlights international collaboration and Shukla’s role as India’s second spacefarer nearly 40 years after Rakesh Sharma.

Netanyahu Vows Israel Will Strike All Iranian Nuclear Sites Without US Approval
Netanyahu Vows Israel Will Strike All Iranian Nuclear Sites Without US Approval

Israeli Prime Minister Benjamin Netanyahu declares Israel will act independently to neutralize Iran’s nuclear program, targeting every facility including Fordo. Ahead of schedule, Israel has already damaged missile launchers and paramilitary forces. Netanyahu emphasizes no foreign approval is needed and highlights ongoing communication with the US amid cautious diplomatic prospects.