The People's Bank of China (PBoC) has decided to keep its key reference interest rates unchanged, following a surprising rate cut in July. The one-year Loan Prime Rate (LPR) remains at 3.35%, while the five-year LPR is steady at 3.85%, both of which were reduced by 10 basis points last month.

This decision comes as China continues to navigate complex economic challenges, including persistent deflationary pressures. In response, the PBoC has implemented several reforms within its interest rate framework, shifting from its previous practices to shorter-term, seven-day reverse repo operations. Previously, banks were directed to set their LPRs based on the PBoC's medium-term lending facility rates.

China remains committed to countering deflationary trends, utilizing both monetary policy and state-driven demand strategies to stabilize its keynesian-based economy.