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.