Chinese banks held their benchmark lending rates for a fifth straight month in the absence of more monetary easing, as officials leave open room for stimulus in the likely case that US tariffs rise again.

The one-year loan prime rate was maintained at 3.1%, according to a statement from the People’s Bank of China on Thursday. The five-year LPR was also unchanged at 3.6%.

The market consensus was for both rates to stay unchanged.

China needs to mobilize funding support to prop up its ailing housing market and spur spending by businesses and households to break a deflation cycle. The world’s second-largest economy has been suffering from weak borrowing demand while price growth remains stubbornly subdued.

Premier Li Qiang has pledged “timely” interest-rate cuts and long-term liquidity injections into the banking system this year, with monetary and fiscal stimulus expected in the coming months to offset the fallout from higher US tariffs.

Banks may lower the five-year LPR “by rather big margins” this year to reduce the cost for mortgage borrowers, the state-run China Securities Journal reported Wednesday, citing Wang Qing, chief macro analyst at Golden Credit Rating.

Wang said such a step would be key to halting the slump in the real estate market, which senior leaders have identified as a top priority of their economic program this year.

A major obstacle to lower lending rates in China has come from the pressure on banks’ profitability, as measured by their record-low net interest margins. In response, the government is issuing 500 billion yuan ($69.1 billion) of special sovereign bonds to replenish capital at large state-owned lenders this year.

While China’s consumer economy has shown signs of revival, more policies to boost domestic spending are probably needed to sustain the upswing.

Retail sales growth picked up at the start of 2025, thanks to the Chinese New Year holiday and as the government expanded a program to subsidize purchases of new consumer goods. A further lift in demand depends in part on whether the benefits of the trade-in program wane in the coming months.