The latest benchmark rates announced by China’s financial authorities have remained unchanged compared to the preceding month.
The loan prime rates (LPR’s) announced by China’s National Interbank Funding Center (全国银行间同业拆借中心) on 20 July were 3.7% for the 1-year LPR and 4.45% for the 5-year LPR, both of which are the same as the LPR’s announced in June.
The prints are consistent with consensus expectations, although some domestic observers anticipate moderate declines in the 5-year LPR in future given uncertainty in the Chinese real estate market and the prioritisation of stable growth by Beijing.
On 15 July PBOC undertook 100 billion yuan in medium-term lending facility (MLF) operations and 3 billion yuan in reverse repo operations, for the purposes of “maintaining rationally ample liquidity in the banking system.”
The MLF rate for the month was 2.85%, holding steady with the reading for June. Analysts said that the MLF rate remaining steady in July meant that the LPR would be unlikely to shift this month, while the 5-year LPR has already declined by a sizeable 15 basis points in May.
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.
