One-year LPR at 3.0%, Five-year LPR at 3.5%
On September 22, the People's Bank of China kept the Loan Prime Rate (LPR), which effectively serves as the benchmark interest rate, unchanged.
On September 21, the People's Bank of China announced that the five-year LPR, which serves as the benchmark for mortgage loans, would be maintained at 3.5%, and the one-year LPR, which serves as the benchmark for general loans, would remain at 3.0%.
This is in line with market expectations compiled by Reuters from a survey of 20 market experts.
In May, as pressure for economic stimulus increased due to tariff conflicts with the Donald Trump administration in the United States, the People's Bank of China cut both the five-year and one-year LPR by 0.1 percentage points for the first time in seven months. Since then, the central bank has kept the rates unchanged for four consecutive months, maintaining a cautious stance. This contrasts with the recent move by the US Federal Reserve, which lowered its rate by 0.25 percentage points.
Reuters explained, "Despite China's economic slowdown and the Federal Reserve's signals of an accommodative monetary policy, the authorities are taking a cautious approach to monetary easing, considering factors such as the easing of US-China trade tensions, a recovery in exports, and a rebound in the stock market."
Each month, China calculates the LPR by aggregating the interest rates set by 20 major commercial banks, taking into account their own funding costs and risk premiums. Although a separate benchmark interest rate exists, the authorities have not adjusted it for a long time, so the LPR effectively serves as the benchmark rate.
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