China Central Bank Freezes LPR, Equivalent to Benchmark Interest Rate
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[Asia Economy Reporter Donghyun Choi] China has kept its loan prime rate (LPR), the de facto benchmark interest rate, unchanged.
According to Xinhua News Agency on the 20th, the People's Bank of China, the central bank, decided to maintain the 5-year LPR at 4.30% and the 1-year LPR at 3.65%.
Previously, the People's Bank of China lowered the 1-year LPR by 0.05 percentage points from 3.70% to 3.65% last month. The 5-year LPR was also cut by 0.15 percentage points from 4.45% to 4.30%.
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The People's Bank of China’s decision to freeze the LPR this month after lowering it last month is interpreted as a consideration of the risk of capital outflows if the interest rate gap with the United States, which is raising rates, widens. This decision by the People's Bank of China carries significant implications as it was made just days before the U.S. Federal Reserve's September policy meeting.
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