(Yicai) Oct. 21 -- China’s central bank has kept its benchmark lending rates unchanged for the 17th month in a row, as better-than-expected economic growth in the third quarter eased pressure for a cut and policymakers prepare to revamp the country’s interest rate framework.

The one-year loan prime rate, a key reference for consumer and corporate lending, remains at 3 percent, and the over-five-year LPR, which guides mortgage rates, stays at 3.5 percent, the National Interbank Funding Center announced yesterday. They were unchanged because the seven-day reverse repurchase rate, which anchors their pricing, has stayed steady.

Stronger-than-expected economic growth reduced the immediate pressure to cut rates, said Dong Ximiao, chief economist at CMB-China Unicom Consumption Finance.

Gross domestic product expanded 4.5 percent in the three months ended Sept. 30 from a year earlier. The figure published by the National Bureau of Statistics on Oct. 19 outstripped the second-quarter’s 4.3 percent clip and the average 4.4 percent forecast by 13 chief economists surveyed by the Yicai Research Institute.

An overhaul of the interest rate framework is also in the offing. The People's Bank of China will study switching its main open-market operations from seven-day to overnight transactions “at an appropriate time,” making the overnight repurchase rate the primary policy rate, Governor Pan Gongsheng told the annual Financial Street Forum on Oct. 19.

He also announced the central bank’s intention to advance the reform of loan pricing benchmarks, moving away from a reliance mainly on the LPR to more diversified pricing benchmarks.

At the end of last month, the PBOC adjusted and improved several monetary policy tools but kept the main policy interest rates steady, meaning the pricing basis for LPR quotations this month has not changed, said Wang Qing, chief macro analyst at Golden Credit Rating International.

In addition, net interest margin at commercial banks is at a historic low of about 1.4 percent, leaving LPR quoting banks with little incentive to compress the additional "spread" incorporated into their loan pricing, Wang pointed out.

Recent LPR quotations have remained stable, mainly because third-quarter GDP growth rebounded and new quality productive forces represented by high-tech manufacturing developed faster in the period.

Against this backdrop, the PBOC is maintaining a steady overall monetary policy stance and is is prioritizing targeted, structural monetary policy tools to strengthen counter-cyclical adjustments, according to Wang.

Looking ahead, after implementing the measures to stabilize structural growth and the real estate market, a period of observing the policy's effects will begin, Wang pointed out, adding that the possibility of the aggregate interest rate cut policy being implemented in the short term drops, with the pricing basis for LPR quotations remaining stable.

Editor: Martin Kadiev