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China's central bank to announce Loan Prime Rate, expected steady
Published Nov 19, 2023 07:45PM ET
Updated Nov 20, 2023 08:48AM ET
BEIJING - The People's Bank of China (PBoC), under Governor Pan Gongsheng, has announced its Loan Prime Rate (LPR) today, a critical benchmark for bank lending and mortgage rates in the country. The one-year and five-year LPRs have been maintained at 3.45% and 4.20% respectively. This decision aligns with market expectations following August's reduction of the one-year rate by 10 basis points from 3.55%, with no further changes enacted since then.
The LPR is a reference interest rate set monthly by the PBoC based on submissions from a panel of domestic and foreign commercial banks operating in China. This rate influences the cost of borrowing for businesses and consumers and plays a substantial role in the broader economic landscape. The panel's submissions are weighted according to each bank's importance in the financial system, with the highest and lowest figures excluded to determine the median rate.
Despite last week’s unchanged Medium-term Lending Facility (MLF) rate, which remained at 2.50% and often serves as a precursor to the LPR decision, there was a unanimous market expectation that today's LPR announcement would maintain the status quo. This decision comes amidst efforts by Chinese monetary authorities to balance economic growth with financial stability against real estate and international headwinds.
Since the inception of the LPR in August 2019, this consistent approach reflects China's commitment to achieving a growth-currency equilibrium. Following the August cut, the International Monetary Fund (IMF) projects a growth of 5.4% this year, slowing down to 4.6% next year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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