MNI BRIEF: China July Loan Prime Rate Reduced By 10bp

China's Loan Prime Rate was cut by 10bps on Monday according to a People's Bank of China statement, following the central bank's unexpected move to reduce the 7-day reverse repo rate by 10 basis points early this morning.

The one-year LPR, based on the PBOC’s Medium-term Lending Facility rate and quotes submitted by 20 banks, was left at 3.35% from 3.45% and the five-year plus maturity was held at 3.85% from 3.95%.The rate last changed in February when the five-year plus maturity was reduced 25bp, while the one-year tenor held steady.

The PBOC also adjusted the typical publication time of LPR to 9am Beijing time from the previous 9:15am on the 20th of every month.

The reduction indicated the PBOC will add efforts to boost the economy after the Party’s Third Plenum unveiled policy changes for ensuring growth, and also reflected the central bank's aim to decouple LPR from the MLF rate and move closer to the short-term 7-day reverse repo rate. (See MNI: PBOC Repos First Step To Narrower Rates Corridor-Advisors)

The bank cut 7-day reverse repo rate 10bp to 1.7%, its first reduction since August 2023.