China Holds Key Rate Steady as Yuan Limits Central Bank’s Room to Maneuver

(Bloomberg) — China refrained from cutting a key policy interest rate as its central bank sought to shield the yuan from volatility, underscoring the challenges policymakers face as they try to manage economic risks and pressure from deflation.

The People’s Bank of China (PBOC) held the interest rate on its one-year policy loans at 2.5% on Sunday while injecting a small amount of cash into the financial system, both moves in line with expectations among most economists surveyed by Bloomberg. The decisions came after the yuan slipped to a three-month low in offshore trading last week amid a resurgence in the U.S. dollar.