MNI POLICY: China Lowers Benchmark Lending Rate LPR By 5 Bps

     BEIJING (MNI) - China's central bank cut its benchmark lending rate, the

one-year Loan Prime Rate (LPR), by 5 bps to 4.15% on Wednesday while also

cutting the five-year LPR by 5 bps to 4.80%. The reductions, announced in a

statement on the People's Bank of China (PBOC) website, are in line with market

expectations after the central bank lowered interbank borrowing costs earlier

this month. A MNI story on Monday also signalled the LPR would be guided lower.

The PBOC also lowered its seven-day reverse repo rate by 5 bps on Monday,

following a similar cut in its one-year medium-term lending facility (MLF) rate

just two weeks ago.

     The LPR, a new reference rate for bank loans, is linked to the one-year

MLF, a rate that is viewed as being closer to market rates for credit.

Designated banks will update their LPR quotations based on the MLF rate on the

20th of each month, after the PBOC reformed the LPR mechanism in August. 

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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