File photograph: 維基小霸王 / Wikimedia Commons. Image and display adaptations licensed under CC BY-SA 4.0.
China left its main bank-lending benchmarks unchanged on Tuesday, keeping the one-year loan prime rate at 3.0% and the rate for loans with a tenor of more than five years at 3.5%.
The National Interbank Funding Center published the October figures with the authorisation of the People’s Bank of China. The announcement was issued at 9am in Beijing, equivalent to 3am South African time, on 20 October.
Both rates matched September’s levels. The central bank said the latest rates would remain valid until the next announcement.
What the rates measure
The loan prime rate, usually shortened to LPR, is a reference that banks use when pricing lending. It has two maturities: one year and more than five years.
According to the PBOC’s published methodology, 20 banks submit quotations. The National Interbank Funding Center removes the highest and lowest, then calculates an average and rounds it to the nearest 0.05 percentage points.
Tuesday’s statement provided the monthly figures without a detailed explanation of why they were held steady.
Reform plans remain in focus
The unchanged rates follow a separate speech by PBOC governor Pan Gongsheng on Monday, in which he outlined plans to broaden the benchmarks used for lending.
Speaking at the Financial Street Forum, Pan said companies with stronger financial-management capabilities could agree with lenders to use an overnight interbank repo rate as an alternative reference for floating-rate loans. LPR could continue to serve smaller businesses and individual borrowers.
He also said the central bank would study changing the main maturity of its open-market operations to overnight. Under that proposed change, the overnight open-market repo rate would become the principal policy rate.
Pan said policy guidance on lending benchmarks would be issued at an appropriate time. He did not set an implementation date in the speech.
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