China's loan prime rates remain unchanged

BEIJING -- China's one-year loan prime rate (LPR), a market-based benchmark lending rate, was 3.1 percent on Thursday, unchanged from the previous month.

The over-five-year LPR, on which many lenders base their mortgage rates, also remained unchanged from the previous reading of 3.6 percent, according to the National Interbank Funding Center.

Analysts believe that keeping the LPR unchanged this month helps stabilize the RMB exchange rate and mitigate interest rate risks, but looking ahead, there is still room for further LPR cuts.

Despite remaining flat, the LPR saw cumulative declines of 35 basis points for the one-year rate and 60 basis points for the over-five-year rate last year, marking the largest annual reductions on record.

China has stepped up counter-cyclical adjustments in the face of downward pressure on the economy since last year. A range of measures have been introduced, from significant cuts in interest rates for existing home mortgages to the creation of new financing tools for the capital market.

China will further strengthen counter-cyclical adjustments by leveraging a range of monetary policy tools, including interest rates and the reserve requirement ratios, to maintain ample liquidity and ensure a supportive environment for social financing, said Xuan Changneng, deputy governor of the People's Bank of China (PBOC), at a press conference last month.

A PBOC report released earlier this month also highlighted the need for enhanced analysis and oversight of liquidity supply and demand within the banking system and financial markets.

The report called for stronger coordination of macroeconomic policies to support expanding domestic demand, stabilizing expectations, and boosting market vitality.