China's 'De Facto Benchmark Rate' LPR Holds Steady for 9 Months
China's central bank, the People's Bank of China, has effectively kept the Loan Prime Rate (LPR), which serves as the benchmark interest rate, unchanged for the ninth consecutive month.
On the 22nd, the People's Bank of China announced that the 1-year and 5-year LPRs remain at 3.65% and 4.3% per annum, respectively, the same as the previous month. This marks the ninth month in a row that the LPR has stayed at the same level since August last year.
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The LPR is an average rate calculated by aggregating the loan rates offered to the best customers by 18 designated banks. However, in practice, the People's Bank of China determines the rate considering overall conditions, and financial institutions within China use it as a lending benchmark, effectively making it the benchmark interest rate. The 1-year LPR applies to general loans, while the 5-year LPR is the standard for mortgage loans. The 1-year LPR was lowered twice last year, in January and August, while the 5-year LPR was cut three times in the same year, in January, May, and August.
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