China's 'De Facto Benchmark Interest Rate' LPR Held Steady as Expected

China has kept its loan prime rate (LPR), which is considered the de facto benchmark interest rate, unchanged.

[Image source=Reuters Yonhap News]

The People's Bank of China, the country's central bank, announced on the 20th that it would maintain the 1-year and 5-year LPRs at 3.1% and 3.6%, respectively. Typically, the 1-year LPR serves as the benchmark for general loans such as credit loans, while the 5-year LPR is used as the basis for mortgage loan interest rates, making them regarded as benchmark rates. The market had anticipated the People's Bank of China to keep the LPR unchanged this month.

Earlier, the People's Bank of China lowered the LPR last month after three months amid concerns that the target growth rate of around 5% for this year was at risk, signaling a red light and prompting liquidity supply. The 1-year and 5-year LPRs were each cut by 25 basis points (1bp = 0.01 percentage points) compared to the previous month.