The People’s Bank of China announced on Monday, April 22, that it will keep the benchmark interest rate at 3.45% for the ninth consecutive month. The decision was widely expected by analysts, who did not foresee any changes.
The one-year benchmark lending rate (LPR) will remain at this level for at least another month. This indicator, established in 2019 as a benchmark for interest rates, influences the price of new loans, especially for companies, and loans with variable interest.
The LPR is calculated based on contributions from a range of banks, including small lenders with higher financing costs and greater exposure to non-performing loans. The aim is to reduce financing costs and support the real economy.
The last reduction in the one-year LPR took place in August 2023, when the central bank cut ten basis points, from 3.55% to the current 3.45%, a more cautious decision than predicted by analysts.
In addition, the central bank said that the LPR for terms of five years or more, used as a benchmark for mortgage lending, will remain at 3.95%. In February, there was a 25 basis point reduction in this indicator, from 4.2% to 3.95%, the biggest drop since the creation of the LPR system in 2019, exceeding market expectations.
