The benchmark rate for the Chinese banking sector has held steady for the 15th consecutive month in the month of July.
The LPR’s issued by China’s National Interbank Funding Center (全国银行间同业拆借中心) on 20 July were 3.85% for the one year LPR and 4.65% for the five year LPR – the same as the readings for the preceding month.
China’s LPR’s have remained at the same level since April 2020, 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%.
The latest LPR arrives just after the Chinese central bank reduced the reserve ratio by 0.5 percentage points, which is expected to cut annual costs for banks by 13 billion yuan, and was expected to drive a small decline in the LPR.
“It is likely that the reason that the LPR for July remained unchanged is that the average adjustments of the 18 quoting banks was smaller than the minimum adjustment calculation increment, which is 5 basis points,” said Wang Qing (王青), chief macro-analyst with Golden Credit Rating.
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.