Paramilitary police officers stand guard in front of the headquarters of the People's Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang

SHANGHAI (Reuters) -China left benchmark lending rates unchanged for the fifth consecutive month in October on Monday, meeting market expectations despite signs of slowing economic momentum.

WHY IT'S IMPORTANT

The decision to hold steady on Loan Prime Rate (LPR) fixings highlights policymakers' caution in introducing fresh monetary stimulus ahead of a key policy meeting this week. The move comes amid trade tensions between Beijing and Washington.

BY THE NUMBERS

The one-year loan prime rate was kept at 3.0%, while the five-year LPR was unchanged at 3.5%.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

In a Reuters survey of 27 market participants conducted last week, all participants predicted no change to either of the two rates.

CONTEXT

Beijing and Washington have once again imposed tit-for-tat measures amid intensifying trade tensions. China announced it would increase rare earth export controls and U.S. President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export curbs from November 1.

The Fourth Plenum, from October 20 to 23, will outline the government's economic, political and social agenda as well as its development plans for the next five years.

Meanwhile, China is due to release third-quarter gross domestic product (GDP) and other activity indicators at 0200 GMT.

A Reuters poll showed that China's economic growth likely slowed to a one-year low in the third quarter as a prolonged property downturn and trade tensions weigh on demand, keeping pressure on policymakers to roll out more stimulus to shore up confidence and momentum.

KEY QUOTES

** GOLDEN CREDIT RATING

"The central bank may cut interest rates and reserve requirement ratio (RRR) before year-end, prompting downward adjustments in LPRs."

They added that current low price levels give monetary policy ample room to ease.

** DBS

"Investors are closely watching developments in the China-U.S. trade negotiations. If a truce extension is reached, growth outlook could improve, prompting dip-buying in equities and offering some temporary support to long-end yields."

(Reporting by Shanghai Newsroom; Editing by Jacqueline Wong)