People's Bank of China Cuts 1-Year LPR by 0.1%P
The People's Bank of China, the central bank, cut the prime lending rate (LPR), which serves as the benchmark interest rate, on the 21st, but showed a somewhat cautious approach.
On that day, the People's Bank of China announced that it would adjust the 1-year LPR down by 0.1 percentage points to 3.45%. The 5-year LPR was maintained at 4.20%.
The LPR is calculated by aggregating the lending rate trends for prime customers from 18 designated banks. Local financial institutions use this as a basis for lending, so it functions as an effective benchmark interest rate. The 1-year rate affects general loans, while the 5-year rate impacts mortgage loans.
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The cut in the 1-year LPR comes two months after the reduction in June (0.1 percentage points). In July, both the 1-year and 5-year rates were held steady. The market had expected the People's Bank of China to lower both the 1-year and 5-year rates by 0.15 percentage points on this occasion.
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