PBOC held 1 and 5 year rates steady today for the 15th month in a row

China loan rates: 1-year 3.85% (as expected) & 5-year 4.65% (as expected)

The Loan Prime Rates (LPR) are a benchmark rate for loans to business and households in China. There had been some (not consensus) expectations for a slight decline in the 1-year rate:

• China state financial media say rates to be kept unchanged by the PBOC today

Earlier this month the PBOC lowered the amount of cash that banks must hold as reserves, i.e. cut the Reserve Requirement Ratio (RRR), which in effect freed up around 1 trillion yuan in long-term liquidity.

Following this cut the most recent medium-term lending facility (MLF) was conducted at a steady rate (unchanged at 2.2% for these one-year loans to banks). Changes in the MLF rate often precede LPR change.

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The LPR is a lending reference rate set monthly by 18 banks

• at a premium over the MLF rate

For more on PBOC tools, this is an old post with some info:

• an alphabet soup guide to PBOC policy tools here for an explanation