China Holds Benchmark Interest Rate as Expected... LPR 1-Year at 3.1% and 5-Year at 3.6%

On the 20th, China kept its loan prime rate (LPR), the de facto benchmark interest rate, unchanged as expected by the market.

The People's Bank of China, the country's central bank, announced 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, thus regarded as the benchmark interest rate.

The market had anticipated the PBOC's decision to keep the LPR unchanged this month due to the weakening yuan. The onshore yuan-dollar exchange rate traded around 7.31 yuan, reaching its highest level since October last year.

Earlier, amid concerns that the target growth rate of around 5% for this year was at risk, the PBOC cut the LPR in September for the first time in three months to inject liquidity. The 1-year and 5-year LPRs were lowered by 25 basis points (1bp = 0.01 percentage points) each compared to the previous month.