China Central Bank Holds Benchmark LPR Rate Steady for Two Consecutive Months (Update)

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] China has kept the Loan Prime Rate (LPR), which serves as the benchmark interest rate, unchanged for two consecutive months.

On the 20th, the People's Bank of China, the central bank, announced that it would keep the 1-year LPR at 3.65%. The 5-year LPR, which serves as the benchmark for mortgage loans, also remains unchanged at 4.30% from the previous month.

To stimulate the sluggish real estate market, China had cut the 1-year LPR in December last year, January this year, and last August. For the 5-year LPR, it was lowered three times this year in January, May, and August.

The People's Bank of China, which had shown a trend of lowering interest rates this year, decided to keep the rates unchanged for two consecutive months, which is interpreted as a concern over capital outflows due to the interest rate gap with the United States and rising inflation within China.

The fact that this decision was made during the 20th National Congress of the Communist Party of China (Party Congress) is also believed to have been taken into consideration. A rate cut during the Party Congress could be interpreted as partially indicating the tone of Xi Jinping's third term. Although Chinese President Xi Jinping did not mention any changes in real estate policies in his work report on the opening day, the official transcript released by state media included the phrase "housing is for living, not for speculation," suggesting that the authorities do not intend to ease related regulations immediately.

However, to improve housing purchase demand, local governments and frontline banks have been instructed to lower mortgage rates for first-time homebuyers, and recently, related mortgage rates have fallen to the 3% range.

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