China holds benchmark lending rates steady, confounds markets
Analysts expect cuts soon as Fed39;s easing gives Beijing leeway
Raft of weak Chinese economic data raises urgency for policy action

SHANGHAI, Sept 20 Reuters China unexpectedly left benchmark lending rates unchanged at the monthly fixing on Friday, confounding market expectations that were primed for a move after the Federal Reserve delivered an outsized interest rate cut earlier this week.

However, market watchers widely believe further stimulus will be rolled out to prop up an ailing economy, as the Fed39;s easing offers Beijing leeway to loosen monetary policy without unduly hurting the yuan.

The oneyear loan prime rate LPR was kept at 3.35, while the fiveyear LPR was unchanged at 3.85.

In a Reuters survey of 39 market participants conducted this week, 27, or 69, of all respondents expected both rates to be trimmed.

The rate cut is likely to be included in a larger policy package, which is being reviewed by senior officials, said Xing Zhaopeng, senior China strategist at ANZ, referring to Chinese policymakers.

Current economic data and expectations all support a rate cut. And, lowering existing mortgage loan rates also requires further reductions in the 5year LPR, which may lead to a onetime and significant decline in the LPR in the fourth quarter.

A string of August economic data, including credit lending and activity indicators, surprised to the downside and raised the urgency to roll out more…