China keeps LPR unchanged at 3.45 percent
Date
5/20/2024 9:06:59 AM
(MENAFN) On Monday, China's one-year loan prime rate (LPR), a key market-based benchmark lending rate, maintained its stability at 3.45 percent, consistent with the previous month's level. Similarly, the over-five-year LPR, which serves as the foundation for many lenders' mortgage rates, also remained unchanged at 3.95 percent, according to the National Interbank Funding Center.
This steady rate environment follows a notable adjustment in February, when China implemented a 25 basis point reduction in the over-five-year LPR, bringing it down to 3.95 percent. This move marked the most significant rate cut in recent years, aimed at stimulating economic activity. Interestingly, the one-year LPR remained unaltered during this adjustment period.
The decision to maintain the LPR at current levels is anticipated to provide support to both the credit and property markets. By keeping borrowing costs stable, businesses and individuals are expected to benefit from reduced financial burdens, thus contributing to a more stable economic recovery trajectory.
Crucially, the monthly publication of LPR data serves as a vital pricing reference for banks, aligning their lending rates with the rates set by the central bank's open market operations, notably the medium-term lending facility rate. This mechanism ensures a transparent and market-driven approach to interest rate determination, facilitating efficient capital allocation and lending practices within the financial system.
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