China's central bank, the People's Bank of China, announced on the 20th that it will keep the loan prime rate (LPR), the "de facto benchmark interest rate," unchanged.
The 5-year LPR, which serves as the benchmark for mortgage loans, will be maintained at 3.6%, and the 1-year LPR, which acts as the benchmark for general loans, will remain at 3.1%.
The LPR is calculated by aggregating the loan rates offered to the best customers by 18 designated banks. Since local financial institutions base their lending on this rate, it effectively functions as the benchmark interest rate.
The People's Bank of China has kept the LPR unchanged for three months after lowering it by 0.25 percentage points in October to stimulate the economy.
However, since the Central Economic Work Conference last December announced a shift from a "moderate monetary policy" stance to a "appropriately accommodative monetary policy" and emphasized the need to lower reserve requirement ratios and interest rates to maintain liquidity, there are expectations that a decision to cut the reserve requirement ratio may be made ahead of the major holiday, the Spring Festival (Chunje, Lunar New Year).
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