China’s Benchmark Loan Prime Rate Remains Unchanged in July

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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.