SHANGHAI/SINGAPORE (Reuters) -China left benchmark lending rates unchanged at a monthly fixing on Thursday, in line with market expectations.

WHY IT’S IMPORTANT

The steady monthly LPR fixings underscore that Beijing’s monetary easing efforts continued to be limited by narrowing interest rate margins and a weakening currency, despite a flurry of recent data showing more support is needed to shore up an uneven economic recovery.

BY THE NUMBERS

The one-year loan prime rate (LPR) was kept at 3.45%, while the five-year LPR was unchanged at 3.95%.

In a Reuters survey of 30 market participants conducted this week, 21, or 70% of all respondents, expected both rates to stay unchanged.

China’s new home prices fell at the fastest pace in more than 9-1/2 years in May, official data showed on Monday, with the property sector in a depressed state despite government efforts to rein in oversupply and support debt-laden developers.

New bank lending in China rebounded far less than expected in May and some key money gauges hit record lows, suggesting the world’s second-largest economy is still struggling to pick up the recovery pace.

CONTEXT

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

The five-year LPR was lowered by a decent 25-basis-point in February to support the housing market.

Financial News, a central bank-backed newspaper, said in a commentary this week that China still has room to lower interest rates, but its ability to adjust monetary policy faces internal and external constraints.

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