China left its key interest rates unchanged on Friday as Beijing faces the challenge of boosting economic growth while supporting a weakening yuan.

The People’s Bank of China said it would stabilize The key interest rate for one-year loans is 3.1%, the LPR for five years is 3.6%. The 1-year LPR affects business and most household loans, while the 5-year LPR serves as a reference for mortgage rates. The move was expected, according to a Reuters poll of 27 economists.

The interest rate decision was based on the generally expected 25 basis points Interest rate cut through the US Federal Reserve on Wednesday. The Fed also said it will cut interest rates just twice in 2025, fewer than the four cuts forecast at its September meeting.

Analysts said The Fed’s revised outlook for future interest rate cuts is unlikely to have a major impact on the direction of China’s central bank’s monetary easing, although it could put pressure on the Chinese yuan.

It appears the PBOC is not stepping in to defend the yuan, Farzin Azarm, managing director of equity trading at Mizuho Americas, told CNBC’s “Street Signs Asia” on Friday.

“But really, what’s it about? … I think at this point it really depends on what happens with interest rates. I think it really depends on what the curve is doing in the US. And I think the central bank is moving forward. “To be completely honest, I’m letting it happen,” Azarm said.

Earlier this month, top Chinese officials promised Top meeting to set the economic agenda Increase monetary easing measures, including the implementation of interest rate cuts, to support the struggling economy.

The PBOC maintained the one-year and five-year LPRs unchanged in November, after a widely expected 25 basis point cut in October. The central bank had surprised the markets by reducing key short- and long-term lending rates in July.

Major investment banks and research firms are predicting this The Chinese yuan would continue to weaken next year, in anticipation that President-elect Donald Trump will follow through on his tariff threats.

Despite a flurry of stimulus measures since late September, the latest economic data from China showed the country is still struggling with stubborn deflation amid subdued consumer demand and a continued slump in the property market.

The Fed’s future easing cycle will “create some room for the PBOC to follow suit,” Yan Wang, chief emerging markets and China strategist at Alpine Macro, told CNBC.Asia street signs” on Thursday, while emphasizing that fiscal easing will play a more important role in boosting China’s economy next year.

In a note to CNBC on Friday, Wang said he believes the PBOC should further cut interest rates to ease the yuan’s deflationary pressures against other currencies.

“Now the Chinese government has greater fiscal flexibility and is likely to rely more on fiscal measures to stimulate growth,” he added.

—CNBC’s Dylan Butts contributed to this report.