LPR Still Has Downward Space In H2-Herald

China’s financial regulators are likely to guide down banks’ capital costs to drive down their Loan Prime Rate quotations in H2, thereby reducing the loan interest rates for enterprises and residents, the 21st Century Business Herald reported citing analysts. LPR, based on the rate of PBOC’s Medium-term Lending Facility and quotations submitted by 18 banks, remains at 3.70% for the one-year maturity and 4.45% for five years this month. The PBOC is less likely to cut the MLF rate due to the expected significant monetary tightening by the Fed, analysts said. There is room for a 5-10 bps in one-year LPR, and a 10-15 bps cut in the five-year one, by means of deposit interest rate reform and reserve requirement ratio cuts to lower banks’ costs, the newspaper said citing Ming Ming, chief economist at CITIC Securities.