The policy call follows the country's Q2 GDP results, which reported 0.8% growth for the period, a drop from the 2.2% increase in Q1.
China maintained the one-year loan prime rate (LPR) was kept at 3.55%, while the five-year LPR was unchanged at 4.20%, in line with economists' expectations.
The policy call follows the country's Q2 GDP results, which reported 0.8% growth for the period, a drop from the 2.2% increase in Q1.
Chinese growth falters to 0.8% in second quarter of 2023
The central bank elected to hold interest rates on Monday (20 July) as well due to the loss of momentum in its economic growth.
Following the results, the Bank of America said it had downgraded its GDP growth forecast for China this year, calling the Q2 data «disappointing».
It said the rerating was also driven by the «potential delay in policy response» as it now expects «only piecemeal easing in the near term, before policy makers roll out more meaningful measures towards late Q3».
Four graphs explaining... China
Analysts said such deceleration combined with the negative GDP deflator, elevated youth unemployment, and corporate profit contraction are the «tell-tale signs of a negative output gap», which implies more policy support is needed to boost aggregate demand to a level closer to the long-term potential, «given sluggish external demand».
This means the upcoming Politburo meeting of the Chinese Communist Party will be a «crucial window» to gauge the authorities' policy stance, although BofA analysts do not expect there to be major stimulus this year.
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