China Keeps De Facto Benchmark LPR Unchanged for 11th Month: 1-Year at 3%, 5-Year at 3.5%

The People's Bank of China kept the loan prime rate (LPR), which effectively serves as the country's benchmark interest rate, unchanged for the eleventh consecutive month on April 20.

On the same day, the central bank announced that the five-year LPR, which serves as the benchmark for mortgage lending, would remain at 3.5%, while the one-year LPR, the reference rate for general loans, would stay at 3.0%.

People's Bank of China. Yonhap News

The market also widely anticipated that rates would be held steady this month. In a Reuters poll, all 20 experts surveyed predicted that the LPR would remain unchanged in April.

The People's Bank of China last cut both the five-year and one-year LPRs by 0.1 percentage point in May last year, following growing pressure to implement economic stimulus measures amid tariff tensions with the Donald Trump administration in the United States. Since then, rates have been held steady for eleven consecutive months, including this month.

China's GDP for the first quarter of this year, announced on April 16, grew 5.0% compared to the same period last year, raising expectations that the country will meet its economic growth targets. At the annual "Two Sessions" (the National People's Congress and the Chinese People's Political Consultative Conference), China set its 2026 economic growth target at a lower range of 4.5–5%, compared to previous years. The Producer Price Index (PPI) for March also rose 0.5% year-on-year, turning positive for the first time in 42 months and easing concerns over deflation.

According to foreign media outlets such as CNBC, the stronger-than-expected growth of China's economy at the beginning of the year has reduced the need for additional stimulus, prompting the central bank to delay further rate cuts. Wei Song, Chief China Economist at UBS Securities, said that rising inflationary pressures have reduced the incentive for the People's Bank of China to cut policy rates or implement large-scale easing measures in the near future, adding that it may also take time to assess the impact of external uncertainties stemming from conflicts in the Middle East.

China calculates the LPR each month by aggregating the lending rates of 20 major commercial banks, taking into account their own funding costs and risk premiums. Although a separate official benchmark rate exists, it has not been adjusted for a long time, making the LPR the de facto benchmark interest rate.

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