China's 'De Facto Benchmark Interest Rate' LPR Held Steady for 2 Consecutive Months

On the 20th, China kept its Loan Prime Rate (LPR), which serves as the de facto benchmark interest rate, unchanged for the second consecutive month.

The People's Bank of China, the country's central bank, announced that it would maintain the 5-year LPR at 3.85% and the 1-year LPR at 3.35%.

[Image source=Yonhap News]

The People's Bank had lowered both the 5-year and 1-year LPR by 0.1 percentage points in July and kept them steady last month.

Although the United States cut its benchmark interest rate by 0.5 percentage points the day before, creating some policy room, China appears to be taking a wait-and-see approach to the economic situation before making any decisions.

The LPR is calculated by aggregating the lending rates offered to the best customers by 18 designated banks. The 5-year rate affects mortgage loans, while the 1-year rate influences general loans. Since local financial institutions base their lending rates on the LPR, it effectively functions as the benchmark interest rate.

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