I posted on this on Monday:

Reuters have followed up with a survey:

  • In a survey of 27 market watchers conducted this week, 25, or 92.6%, of all respondents expected a reduction to the five-year LPR on Tuesday. They projected a cut of five to 15 basis points.
  • 7 of the 27 expect a cut to the one-year
  • banks' improving net interest margins give authorities some leeway to use monetary stimulus

The Loan Prime Rate (LPR) normally charged to banks' best clients is calculated each month after 20 designated commercial banks submit proposed rates to the People's Bank of China (PBOC).

Current LPR rates are:

  • 3.45% for the one year
  • 4.20% for the five year

The one-year LPR was lowered twice by a total of 20 basis points in 2023.

The five-year rate was last lowered in June 2023 by 10 basis points.



The PBOC's Loan Prime Rate (LPR):

  • Its an interest rate benchmark used in China, set by the People's Bank of China each month on the 20th.
  • The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
  • Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
  • Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
    • The panel consists of both domestic and foreign banks, with different weights assigned to each bank's contributions based on their size and importance in the Chinese financial system.
    • The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.
PBOC cut