Sunday, December 10, 2023

China maintains its reference interest rate at 3.65%

He People’s Bank of China (BPC, central) announced today that it will maintain its reference interest rate at 3.65%, unchanged since the reduction of five basis points that it carried out in August of last year.

In the monthly update published on its website, the institution indicated that the reference rate for credits (LPR, acronym in English) to one year will remain at its current level until, at least, within a month.

This indicator, set as reference for interest rates in 2019, it is used to set the price of new loans -generally, for companies- and variable interest loans that are pending repayment.

His calculation is made from price contributions from a number of banks – including smaller lenders who tend to have larger financing costs and greater exposure to delinquent credits-, and its objective is to lower the costs of borrowing and support the “real economy”.

For its part, the LPR for five years or more -the reference for mortgage loans- also registered no changes, remaining at 4.3% after having also experienced its last cut in August 2022, in its case of 15 basis points.

The BPC thus complies with the most widespread forecasts among analysts, who anticipated that there would be no movement in the main interest rates in China in this month’s update.


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