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China's central bank Monday left its benchmark rate for loans unchanged for the 14th straight month even after the factory gate price jumped to a 13-year high.

The Loan Prime Rate, guiding companies' cost of borrowing, remains at 3.85% for the one-year maturity and 4.65% for five years. The move was expected as the PBOC had left the Medium-term Lending Facility rate at 2.95% on June 15.

The LPR is linked to the one-year MLF, which is viewed as being closer to market rates. The PBOC has remained moderate in its daily open market operation since March 1 with small CNY10 billion injections on most days. It has made zero net injection in the inter-bank market via OMOs this month and has rolled over CNY20 billion via MLF this month.

Bond traders and policy advisors expected that the PBOC would remain its policy rates unchanged for the rest of the year. They also anticipated increased liquidity injection or loosened credit given slower growth and more local government bond issuances.

Since the previous LPR reform in August 2019, the PBOC has cut 46 bps off the one-year LPR and 20bps off the five-year. In April 2020, after a 6.8% contraction in Q1 GDP, the PBOC cut the one-year LPR by 20 bps and the five-year by 10 bps, the biggest cuts since the LPR mechanism was reformed in August 2019.