China effectively lowered the loan prime rate (LPR), which serves as a benchmark interest rate, last month after seven months and has kept it unchanged this month. This aligns with market expectations.
The People's Bank of China, the central bank of China, announced on the 20th that it will maintain the one-year LPR at 3.0% and the five-year LPR at 3.5%. The LPR is the average interest rate of loans to prime customers from 20 major commercial banks, and financial institutions use it as a reference to determine loan rates. The one-year LPR serves as the interest rate benchmark for general loans, while the five-year LPR applies to dwellings.
Earlier, the People's Bank of China lowered the LPR by 0.1 percentage points on the 20th of last month. This is the first time the People's Bank has lowered the LPR since a 0.25 percentage point cut last October. This move aims to supply liquidity to the market and stimulate domestic demand, and the People's Bank also reduced the reserve requirement ratio (RRR) by 0.5 percentage points earlier last month.