China Keeps De Facto Benchmark LPR Unchanged for 10th Month: 1-Year at 3%, 5-Year at 3.5%

The People's Bank of China kept its Loan Prime Rate (LPR), which serves as the de facto benchmark interest rate, unchanged for the tenth consecutive month on March 20.

The People's Bank of China announced that the five-year LPR, which is used as a reference for mortgage loans, will remain at 3.5%, while the one-year LPR, which serves as a benchmark for general loans, will remain at 3.0%.

People's Bank of China. Yonhap News Agency

The market largely anticipated a freeze this month as well. According to a survey conducted by Reuters of 20 market participants, all respondents expected the LPR to remain unchanged.

As pressure for economic stimulus increased due to tariff disputes with the U.S. under the Trump Administration, the People's Bank of China cut both the five-year and one-year LPRs by 0.1 percentage points in May last year, after a seven-month hiatus. Since then, the rates have been held steady for ten consecutive months through this month.

At the recent "Two Sessions" (National People's Congress and Chinese People's Political Consultative Conference), China set its economic growth target for this year at 4.5–5%. While the country achieved its annual gross domestic product (GDP) growth target of around 5% for three consecutive years, including 5% last year, it has now lowered the lower end of the target. U.S. broadcaster CNBC, citing analysts, noted that the slight reduction in the growth target means the urgency to roll out economic stimulus measures has diminished.

However, as Chinese authorities have set stable economic growth and a reasonable recovery in prices as the main objectives of their monetary policy, many expect that the accommodative monetary stance will continue, increasing the likelihood of cuts in the LPR and other key interest rates within this year.

China calculates the LPR each month by aggregating the interest rates offered by 20 major commercial banks, taking into account their own funding costs and risk premiums. While a separate benchmark rate exists, it has not been adjusted by the authorities for an extended period, so the LPR effectively functions as the benchmark interest rate.

This content was produced with the assistance of AI translation services.