China's reference lending rate remained unchanged on Tuesday, according to a statement on the People's Bank of China website, which was in line with market expectations as the central bank kept a key policy rate steady last week.
The Loan Prime Rate, based on the rate of PBOC’s Medium-term Lending Facility (MLF) and quotes submitted by 18 banks, remained at 3.65% for the one-year maturity and 4.3% for five years and above. The PBOC injected CNY400 billion of one-year MLF last week, and partially rolled over a maturing CNY600 billion with the rate unchanged.
The PBOC unexpectedly cut the 5-year LPR by 15 bps in August and also lowered the one-year LPR by 5bps. The cuts aimed to boost credit, particularly in mortgage lending.
Analysts and economists forecast the LPR would be cut again later this year as major banks have made an across-the-board cut in deposit rates, which would help reduce lenders’ funding cost and leave room for lowering real loan rates. (See: STATE OF PLAY: China LPR Seen Steady, Before Cuts Later In '22)