(Bloomberg) -- Chinese banks kept their main lending rates unchanged following the central bank’s decision to put policy rate cuts on hold as the economy starts to gradually recover from Covid lockdowns. 

The one-year loan prime rate was left at 3.7%, according to a statement by the People’s Bank of China Monday. The rate was last lowered in January. Twenty-two of the 25 economists polled by Bloomberg correctly predicted the decision.

The five-year rate, a reference for mortgages, was also maintained at 4.45%, following a record 15-basis point cut last month. That was in line with the forecasts of 17 of the 20 economists surveyed by Bloomberg.

The LPRs are based on interest rates that 18 banks offer their best customers, which are given in quotes as a spread over the one-year medium-term lending facility rate. The PBOC refrained from cutting the MLF rate last week, avoiding further divergence with a hawkish Federal Reserve that has led to record outflows from China’s sovereign debt and weakened the yuan.

The central bank has taken a measured easing approach this year, relying more on targeted stimulus for small businesses and the property sector, steps to lower banks’ funding costs and putting pressure on banks to boost loans. 

The State Council, China’s cabinet, said in a meeting last week that the country “won’t print an excessive amount of money or overdraw the future,” indicating caution against the kind of monetary stimulus that major developed nations took in response to the pandemic, and which is now fueling inflation.

China’s economy is gradually recovering from the worst of the Covid disruptions earlier this year. However, borrowing demand by households and companies still remains weak due to the pandemic-induced slump and a months-long property downturn. While credit picked up in May, it was largely attributed to a jump in government bond sales and a rise in short-term lending.

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