The People’s Bank of China (Central Bank) has kept the LPR (Loan Prime Rate) for one year at 3.45% per annum, the lowest in history, Report informs referring to Interfax.
The rate on five-year loans was lowered to 3.95% from 4.2%. The reduction in this rate was the first since June 2023; its level is also the lowest since its introduction.
Analysts surveyed by Trading Economics on average expected the one-year rate to drop to 3.3% and the five-year rate to 4.05%.
Last weekend, the Central Bank did not change the rate on loans under the Medium-term Lending Facilities (MLF), leaving it at 2.5% per annum. The MLF is an important lending instrument used by the Chinese Central Bank to provide liquidity to commercial banks and directly affects its prime LPR rate.
LPR became a new benchmark in August 2019 after the Chinese Central Bank carried out interest rate reform. Starting from 2020, the regulator requires banks to focus specifically on LPR when determining rates on new loans. The five-year rate directly affects the cost of mortgage loans, the annual rate - all others.
