The People’s Bank of China (PBOC) has kept its Loan Prime Rates (LPRs) the same. The one-year LPR is at 3.00%, and the five-year LPR remains at 3.50%. Right now, the AUD/USD has gone up by 0.09%, trading at 1.1664. The PBOC’s main goals are to maintain price stability, support economic growth, and encourage financial reforms.

Ownership And Influence

The PBOC is owned by the state of China and is influenced by the Chinese Communist Party. The Secretary of the CCP Committee, appointed by the Chairman of the State Council, has a role in the bank’s management. The PBOC uses different policy tools, like the Reverse Repo Rate and the Medium-term Lending Facility. Changes in the LPR affect loan and mortgage rates, savings interest, and the value of the Renminbi. China’s banking sector also includes 19 private banks, including digital banks like WeBank and MYbank, which began operations in 2014, marking a move away from a state-controlled financial system. On October 20, 2025, the People’s Bank of China kept its key lending rates steady, a decision we expected. This suggests a focus on currency stability rather than aggressive economic stimulus. It shows that the central bank is carefully managing slow domestic growth while considering the risk of capital outflows.

Economic Data And Its Implications

This careful approach makes sense given recent economic data. The yuan is under pressure, close to 7.45 to the US dollar, and cutting rates could have weakened it even more. This comes as third-quarter GDP growth for 2025 was disappointing at 4.8%, below the official target, with youth unemployment still high at over 16%. For traders, this steady approach indicates that the volatility of currency pairs related to the yuan, like USD/CNH, will likely remain low in the coming weeks. The PBOC clearly wants to avoid sharp fluctuations in the exchange rate, making strategies that benefit from a stable market more appealing than those that gamble on big price swings. We can see the impact on commodity-related currencies like the Australian dollar, which saw a slight increase after the news. A stable Chinese policy is seen as a slight positive for Australian exports like iron ore. However, with China’s industrial production growing only 3.5% year-over-year in September, we do not expect a significant rally in these assets. In contrast to the frequent rate cuts during the 2023-2024 property market crisis, this is a more cautious approach. It suggests that officials are now willing to accept slower growth to maintain overall financial stability. We should not anticipate a major stimulus package soon. Thus, selling front-month call options on USD/CNH seems like a sensible strategy, benefiting from the central bank’s aim for a stable currency. It would be wise to keep an eye on upcoming retail sales and new home price data for signs of a deeper slowdown. For now, it seems the most likely movement will be sideways. Create your live VT Markets account and start trading now.

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