China Effectively Holds 1-Year LPR Benchmark Interest Rate at 4.05% (Update)

[Asia Economy Beijing=Special Correspondent Park Sun-mi] China froze the Loan Prime Rate (LPR), which serves as the de facto benchmark interest rate, on the 20th.

On the 20th, the People's Bank of China announced that the 1-year LPR for March was held steady at 4.05%, and the 5-year LPR at 4.75%. Initially, economic experts had anticipated that the People's Bank might lower the LPR by at least 5 basis points (1bp=0.01 percentage points) to minimize the economic impact caused by the spread of COVID-19.

The People's Bank of China has been announcing the LPR, which effectively functions as the benchmark interest rate, on the 20th of every month since August last year.

After the mid-January Spring Festival (Chinese New Year) holiday and the outbreak of COVID-19, China's real economy faced difficulties, prompting the government to align financial policy direction toward lowering financial costs to facilitate lending.

Last month, the People's Bank of China cut the LPR by 0.1 percentage points and, separately, supplied liquidity worth 550 billion yuan (approximately 95.6 trillion won) to the market by lowering the reserve requirement ratio of some banks by 0.5 to 1 percentage points.

This content was produced with the assistance of AI translation services.