Chinese Banks Holds Benchmark Interest Rates Unchanged at 3.45%

Banks in China kept lending interest rates unchanged after the central bank stabilized borrowing costs, amid expectations of further monetary easing in the spring.

Banks kept their key interest rate on one-year loans at 3.45%, which is in line with economists' expectations, according to Bloomberg. 

Data from the People's Bank of China showed that the five-year loan interest rate - a benchmark for mortgages - remained at 4.2%, as expected.

Last week, the People's Bank of China did not cut the interest rate on its one-year loans. 

Beijing has been reluctant to flood the economy with monetary stimulus even though the country is suffering its longest streak of consumer price declines since the late 1990s.

While cutting interest rates could boost waning confidence, policymakers must balance any cut with the need to protect the country's massive banking system and preserve the yuan. However, expectations are increasing for further monetary easing by the spring, according to Bloomberg.

The Fed's next moves will determine the direction of China's monetary policy, as the US central bank recently disputed speculation of an interest rate cut in March.