China's Interest Rates Steady at 3.5% Despite Economic Growth Struggles and Yuan Strengthens

China's economy has been under pressure, with growth slowing to 4.5% year-on-year in the final quarter of last year, its weakest pace since Covid restrictions were lifted in late 2022. Retail sales growth dropped to a 3 year low of 0.9% in December, and the GDP deflator has remained negative for 11 consecutive quarters. Against this backdrop, the People's Bank of China kept its 1-year and 5-year loan prime rates unchanged at 3% and 3.5% respectively on Tuesday, marking a tenth straight month without a change. Meanwhile, the Chinese yuan has strengthened from 6.974 to 6.889 per U.S. dollar since the start of the year. Economists at ING forecast the yuan will fluctuate between 6.85 and 7.25 this year.