SHANGHAISINGAPORE, Jan 22 Reuters China kept benchmark lending rates unchanged at their monthly fixing on Monday, matching expectations with Beijing seen as having limited scope for monetary easing amid downward pressure on the yuan.

The decision came after the People39;s Bank of China PBOC surprised markets last week by holding its mediumterm lending facility rate steady.

The central bank has stood pat despite recent data underscoring the uneven nature of China39;s economic recovery and deflationary pressures pushing up real borrowing costs.

Julian EvansPritchard, head of China economics at Capital Economics said policymakers appear to harbour lingering concerns about the yuan.

A cut at this stage could trigger additional depreciation pressure, something the PBOC wants to avoid. Therefore, it may stick to quantitative easing tools for now, he said, citing pledged supplementary lending as an example.

The oneyear loan prime rate LPR was kept at 3.45, and the fiveyear LPR was unchanged at 4.20. In a Reuters poll of 27 market watchers last week, all but one participant predicted both LPRs would stay unchanged.

Most new and outstanding loans in China are based on the oneyear LPR, while the fiveyear rate influences the pricing of mortgages.

Downward pressure on China39;s yuan resurfaced in the new year, weighed down by a dollar buoyant on signs of resilience in the U.S. economy and caution that the Federal Reserve may take longer than some had expected to cut rates….