The People’s Bank of China sets its Loan Prime Rate (LPR) for the one- and five-years today. Due at 0115 GMT, which is 9.15 pm US Eastern time.
The MLF is a useful guide to the LPR setting.
Current LPR rates are:
- 3.45% for the one year
- 4.20% for the five year
Last week the Medium-term Lending Facility (MLF) rate was left unchanged:
Expectations are basically unanimous that the rates will be left unchanged.
PBoC
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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.