One of China’s key interest rate benchmarks has seen a decline in February amidst efforts by Beijing to mitigate the economic impacts of the coronavirus outbreak.
On 20 February the National Interbank Funding Center announced a one-year loan prime rate (LPR) of 4.05%, for a decline of 10 basis points compared to January, and a five-year LPR of 4.75%, for a decline of 5 basis points.
Analysts previously anticipated a reduction in the LPR of around 10 basis points amidst Beijing’s push for banks to give greater support to the Chinese economy, in order to mitigate the impacts of the coronavirus outbreak.
The LPR is the lending rate provided by Chinese commercial banks to their highest quality customers, and serves as the benchmark for the rates provided for other loans.
The LPR is reported once a month on the 20th of each month by the National Interbank Funding Center, and is comprised of a one-year and five-year rate.
At present the LPR reporting group is comprised of 18 commercial banks in China, including an original core group of 10 national banks, plus two municipal commercial banks, two rural village commercial banks, two foreign invested banks and two privately operated banks.
PBOC has steadily sought to increase the influence of the LPR since August 2019, when it called for Chinese banks to make it the key benchmark for new loans.
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