On the 22nd, the People’s Bank of China (PBoC) froze the one-year LPR loan rate, which is the standard for lending rates by financial institutions, at 3.65%.
According to Chinese media, the PBoC announced that it would also maintain the five-year LPR, which is the standard for housing loan rates, at 4.30%.
The LPR announced by the People’s Bank of China every month is actually a policy rate, but it has remained the same for nine consecutive months as expected by the market.
China’s economic recovery slowed in April, which froze the LPR to boost the economy by taking advantage of loan caps for key sectors, the market observed.
China’s economy showed signs of slowing down in April. Housing sales slowed down and industrial production also fell for the first time in five years from the previous month due to seasonal adjustments.
The Consumer Price Index (CPI) rose 0.1 percent from the same month last year, the lowest level in two years and two months.
Still, the People’s Bank of China predicted that demand will take time to recover, but the economic recovery trend will continue.
The People’s Bank of China’s policy is to support the economy by actively providing loans to key sectors such as small and medium-sized companies, real estate developers, and de-carbonization.
In August last year, the PBoC lowered LPR by 0.05 percentage points for one-year and 0.15 percentage points for five years for the first time in three months.
Earlier on the 15th, the People’s Bank of China injected 125 billion yuan (about 23.478 trillion won) in funds through the manipulation of the one-year medium-term liquidity support window (MLF).
Interest rates remained at 2.75 percent. The People’s Bank of China has already announced a freeze in that it sets LPR 1-year, which actually serves as the base rate, based on MLF interest rates.