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China Keeps Loan Prime Rates at Record Lows
(MENAFN) The People’s Bank of China (PBoC) decided on Monday to maintain its benchmark lending rates at historic lows, in line with market expectations.
The one-year loan prime rate (LPR), which serves as a key reference for corporate and household borrowing, remained at 3%. The five-year LPR, widely used as a benchmark for mortgage lending, was also held steady at 3.5%.
The central bank last adjusted rates in May, lowering them by 10 basis points — its first cut of the year — after keeping them unchanged at record lows since a 25 basis point reduction in October 2024.
This latest decision came after China recorded 4.8% economic growth in the third quarter, a slowdown compared to the previous quarter. Other major indicators, including retail sales, industrial output, and investment activity, have also shown signs of weakening in recent months.
The LPR, calculated from the profit margin submissions of 18 banks in China based on the borrowing rate set by the central bank, has functioned as the nation’s benchmark interest rate since 2019.
The one-year LPR is primarily used as a reference for corporate loans, while the five-year LPR guides real estate lending.
Following Monday’s announcement, the Chinese yuan remained largely stable, trading at around 7.04 against the US dollar.
The one-year loan prime rate (LPR), which serves as a key reference for corporate and household borrowing, remained at 3%. The five-year LPR, widely used as a benchmark for mortgage lending, was also held steady at 3.5%.
The central bank last adjusted rates in May, lowering them by 10 basis points — its first cut of the year — after keeping them unchanged at record lows since a 25 basis point reduction in October 2024.
This latest decision came after China recorded 4.8% economic growth in the third quarter, a slowdown compared to the previous quarter. Other major indicators, including retail sales, industrial output, and investment activity, have also shown signs of weakening in recent months.
The LPR, calculated from the profit margin submissions of 18 banks in China based on the borrowing rate set by the central bank, has functioned as the nation’s benchmark interest rate since 2019.
The one-year LPR is primarily used as a reference for corporate loans, while the five-year LPR guides real estate lending.
Following Monday’s announcement, the Chinese yuan remained largely stable, trading at around 7.04 against the US dollar.
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