China has kept its loan prime rate (LPR), which serves as the de facto benchmark interest rate, unchanged for four consecutive months.
On the 20th, the People's Bank of China, the country's central bank, announced that it would maintain the 1-year LPR, which serves as the general loan benchmark, at 3.1%, and the 5-year LPR, which is the benchmark for mortgage loans, at 3.6%.
In China, 20 major commercial banks submit their rates, reflecting their own funding costs and risk premiums, to the interbank funding center every month on the 20th, and the People's Bank of China reviews and announces the aggregated LPR.
Although there is a separate benchmark interest rate, since the authorities have not adjusted it for a long time, the LPR effectively functions as the benchmark rate for commercial banks.
Since last October, China has lowered the 5-year LPR from 3.85% to 3.6% and the 1-year LPR from 3.35% to 3.1%, maintaining these levels since then.
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