The PBOC will set one- and five-year loan prime rates today.

  • around 0115 GMT on Tuesday, 20 September 2022

In August the 1-Year Loan Prime Rate was cut to 3.65% (from 3.70%). As background:

  • most new and outstanding loans in China are based on the one-year LPR
    the previous cut to the 1-year was in January
    the 5 basis point cut is not as much as the 10bp cut that was expected

Also last month, the 5-Year Loan Prime Rate has been cut to 4.30% (from 4.45%)

  • most home mortgage rates are based on the five-year
    the 5-year was last cut in May
    the consensus expectation was for a 10 basis point cut, a 15bp cut is more than most were expecting

For today, given the MLF rate remained steady last week there is no change expected to the LPRs at today's setting. Add in likely PBoC concerns on the weakening yuan (CNY and CNH are falling against the USD, almost everything is!) and the Bank will be hesitant to add even lower rates to reasons for capital to leave the country. Having said this, though, we had a small cut yesterday: