China’s national reference rate for pricing one-year loans has edged down to 4.2%, official data showed Friday, meeting market expectations for a “rate cut” to help lower businesses’ borrowing costs amid an ongoing economic slowdown.
The one-year national loan prime rate (LPR), which is a reference point for pricing bank lending, was set 5 basis points lower than its previous fix that was released a month earlier, according to data from the China National Interbank Funding Center, an entity under the central bank.
The five-year-plus national LPR, a reference for pricing loans with the same maturity such as most mortgages, remained unchanged at 4.85%.
Last month, the People’s Bank of China furthered interest rate reform by ordering lenders to use the national LPRs, instead of its benchmark lending rates, as a reference for setting loan rates. The change is part of the central bank’s efforts to liberalize interest rates by giving the market more influence.
The national LPRs are set by averaging 18 designated commercial banks’ own LPR quotations — the rates they charge their most creditworthy borrower — after discarding the lowest and the highest quotes. The national LPRs are updated on the 20th day of each month.
Contact reporter Lin Jinbing (email@example.com)