SHANGHAI (Reuters) – China is expected to keep benchmark lending rates unchanged for a fifth month in January, a Reuters poll showed, though analysts believe cuts are likely next month after the bank Central promised measures to boost an economy devastated by COVID.

The impending Golden Week holiday, the People’s Bank of China’s decision to leave its policy rate unchanged this week and a new mortgage rate mechanism have made a LPR cut on Friday unlikely.

“LPR’s next announcement, on the last business day before the Lunar New Year holiday, may not be the best time,” Mark Williams, chief Asia economist at Capital Economics wrote in a note to clients. “We think next month is more likely.”

A Reuters poll of 33 market watchers this week showed that 21% or 64% forecast no change in benchmark LPRs, which serve as a price benchmark for bank lending.

The one-year LPR currently stands at 3.65%, while the five-year LPR is 4.30%. China last cut both LPRs in August.

Eleven respondents forecast a five-year LPR cut with no change in one year’s time. Only one respondent predicted a cut in the one-year LPR.

China’s economy grew just 3% in 2022, well below the official target, but the government’s abrupt end to its zero-COVID policy has raised hopes for a robust recovery.

Analysts also noted there is less urgency to implement cuts to the five-year LPR, a benchmark rate for mortgages, after China this month introduced a dynamic adjustment mechanism on mortgage rates for first-time homebuyers. .

Aimed at boosting a struggling real estate sector, the mechanism allows cities to lower or eliminate the PBOC’s required minimum mortgage rate to stop consecutive months of falling home prices.

The LPR is calculated each month after 18 designated commercial banks submit quotes to the National Center for Interbank Financing, an affiliate of the PBOC.

(Reporting by the Shanghai newsroom; editing by Edwina Gibbs)