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MNI POLICY: China Lowers One-Year Loan Prime Rate By 10 Bps

     BEIJING (MNI) - China's central bank cut its one-year Loan Prime Rate (LPR)
by 10 bps to 4.05% on Thursday while also cutting the five-year LPR by 5 bps to
4.75%. 
     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 lowered its one-year medium-term lending facility (MLF) rate by 10 bps on
Monday, following similar cuts to seven-day and 14-day reverse repo rate just
two weeks ago.
     The LPR, a new reference rate for bank loans, is anchored 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 their borrowing cost
on the 20th of each month, after the PBOC reformed the LPR mechanism last
August.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com
[TOPICS: MMQPB$,M$A$$$,M$Q$$$]

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