Sunday, January 19, 2020

China maintains LPR at 4.15% for 2nd month

    China's central bank left its new benchmark interest rate, the one-year Loan Prime Rate (LPR), steady at 4.15 percent for the second month in a row as expected after the rate on the medium-term lending facility (MLF) was maintained on Jan. 14.
     The People's Bank of China (PBOC) also kept the rate on the 5-year LPR, used to price mortgages, at 4.80 percent.
      After reforming its method for calculating LPR and designating it as its new benchmark rate for all loans on August 17, 2019, PBOC set it as 4.25 percent on Aug. 20, 6 basis points below the old LPR and 10 basis points below the previous benchmark lending rate.
      LPR was then cut a further 5 basis points in September and November last year for a total effective easing of 20 points in the benchmark lending rate since August.
      Under the revised method for calculating the benchmark lending rate, LPR is expressed as a spread to the rate on MLF, which last week was maintained at 3.25 percent.



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