The PBOC's Loan Prime Rate (LPR) will be set today, both 1- and 5-year. The TL;DR is that no change in rates is expected.
Currently the one-year LPR is at 3.1%, while the five-year rate is 3.6%
- both were cut by 25 basis points last month, the largest reduction since authorities reformed the LPR pricing system in 2019
What is LPR?
- Its an interest rate benchmark used in China, set by the People's Bank of China each month.
- The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
- Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
- Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
- The panel consists of both domestic and foreign banks, with different weights assigned to each bank's contributions based on their size and importance in the Chinese financial system.
- The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.
- This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the 'prior' (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
