LPR quotation remains unchanged for 10 consecutive months

Securities Times Reporter He Jueyuan

On March 20, the People’s Bank of China authorized the National Interbank Funding Center to announce that the new Loan Prime Rate (LPR) remains unchanged from the previous period, with the 1-year LPR at 3.0% and the over-5-year LPR at 3.5%. Currently, the LPR quotes have remained stable for 10 consecutive months.

From an economic fundamentals perspective, since the beginning of the year, China’s overall economic operation has been stable, with trade and import-export data performing better than expected. In January, the central bank introduced a package of monetary and financial policy measures, including a 0.25 percentage point reduction in various structural monetary policy tool rates. Market institutions generally believe that, in the short term, there is no urgent need to adjust policy interest rates or LPR quotes, and stability is likely to continue.

In terms of interest rate levels, the current social financing cost remains low. In February, the weighted average interest rate for new corporate loans was about 3.1%, about 20 basis points lower than the same period last year; the weighted average interest rate for new personal housing loans was about 3.1%, about 10 basis points lower than the same period last year.

Recently, the Party Committee of the People’s Bank of China held an expanded meeting, clarifying that it will guide and regulate interest rates based on changes in economic and financial conditions and macroeconomic operation. “The central bank will focus more on strengthening the implementation and supervision of interest rate policies, standardizing financing intermediary costs, and ultimately achieving the goal of promoting low overall social financing costs,” said Dong Ximiao, Chief Economist at Zhaolian, in an interview with Securities Times. If the economy faces new downward pressures or external environment changes, comprehensive interest rate cuts and reserve requirement ratio reductions may still be implemented, but RRR cuts should come before interest rate cuts. It is expected that the LPR will decline by only 5 to 10 basis points within the year.