Last Wednesday, the People's Bank of China kept the interest rate on its medium-term lending facility unchanged at 2.5%.
The MLF's no-change rate strongly suggests that the one-year and five-year loan coverage rates will remain at the same rates as well:
- 3.45% and 3.95%, respectively
The MLF rate setting is usually (but not always) reliable evidence that LPR rates will remain unchanged. This did not happen in February. The MLF was unchanged in February but we got a significant reduction in the 5-year LPR.
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The People's Bank of China (PBoC) last week cut:
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People's Bank of China Loan Prime Rate (LPR):
- It is the interest rate benchmark used in China, set by the People's Bank of China every month.
- The LPR serves as a reference rate for banks when they set interest rates for (primarily new) loans issued to their customers.
- Most new and outstanding loans in China are based on the one-year loan interest rate, while the five-year rate affects mortgage pricing.
- It is calculated based on the interest rates provided daily to the People's Bank of China by a panel of 18 selected commercial banks in China.
- The committee consists of 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 rate is based on the average of the rates offered by these banks, excluding the highest and lowest rates to reduce volatility and manipulation. The remaining rates are then ranked, and the average rate becomes the LPR.
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Otherwise, the data evaluation is at the lowest level only:
- This snapshot is from the ForexLive economic data calendar, Access it here.
- The times in the leftmost column are GMT.
- The numbers in the rightmost column are the “previous” result (previous month/quarter as the case may be). The number in the column next to that, where there is a number, is the expected average consensus.