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

Author: Eamonn Sheridan | Category: Central Banks

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:
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. 

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:

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