August Loan Prime Rate Remains Unchanged for Fourth Consecutive Month

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China’s loan prime rate (LPR) for August has remained unchanged for the fourth straight month.

The LPR’s issued by China’s Na­tional In­ter­bank Fund­ing Cen­ter (全国银行间同业拆借中心) on 20 August were 3.85% for the one year LPR and 4.65% for the five year LPR – the same as the previous month.

China’s LPR’s have remained at the same level since 20 April, when the one year LPR fell by 20 ba­sis points com­pared to the March read­ing of 4.05%, and the five year LPR fell by 10 ba­sis points from 4.75%. 

Wang Qing (王青), chief analyst with Golden Credit Rating, said that the August LPR’s are inline with general expectations.

The rate for one-year MLF on 17 August remained unchanged, indicating that one of the reference bases for LPR’s had remained unchanged.

In addition to this since July the seven-day repo rate for depository institutions (DR007) had only seen a slight rise, meaning that the average marginal cost of funds for banks was under some upwards pressure, leaving insufficient cause to make downwards adjustments to any additions to LPR quotes.

Zhou Maohua (周茂华), financial markets analyst at Everbright Bank, leaving the lPR unchanged does not signal a change in Chinese monetary policy, and that in the second half of the year the central bank will continue to maintain “overall moderation,” as well as make flexible adjustments based on changes to the macro-economy, stressing “targeted irrigation” and raising the effectiveness of policy.

The LPR in China is the lend­ing rate pro­vided by com­mer­cial banks to their high­est qual­ity cus­tomers, and serves as the bench­mark for rates pro­vided for other loans.

The Na­tional In­ter­bank Fund­ing Cen­ter serves as the des­ig­nated pub­lisher of the LPR, and re­leases the fig­ures at 9:30 am on the 20th of each month, af­ter first col­lect­ing quotes from the group of re­port­ing banks and cal­cu­lat­ing the av­er­age of these quotes fol­low­ing ex­clu­sion of the low­est and high­est quotes.

Related stories

Con­sumer Lend­ing Rates Drop Be­neath Loan Prime Rate in China as Banks Vie for High-end Clients

Chi­na’s One Year Loan Prime Rate Drops to 3.85%

Loan Prime Rate (贷款市场报价利率)

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