People's Bank of China loan prime rates (LPR) setting for April 2022: rates unchanged

For April the 1 and 5 year remain unchanged

• 1 year at 3.70%
• 5 year at 4.60%
• In March the one-year loan prime rate was held at 3.70% while the five-year remained at 4.60%

more to come

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Background to the setting today:

Last week the PBOC rolled over a medium-term lending facility (MLF) at an unchanged rate.

• PBOC kept its key MLF policy interest rate unchanged on Friday

This lowered the expectation for any cut to LPRs today. For example:

• Goldman Sachs says a PBOC rate cut on Wednesday is unlikely

But, Reuters polling showed otherwise, earlier post in this is here

• 11, or 39% of all respondents, predicted a marginal cut of 5 basis points (bps) to both the one-year loan prime rate (LPR) and the five-year rate
• Another six participants also expect a reduction to either rates within a range of 5 to 10 bps
• The remaining 11 respondents expected both rates to remain unchanged this month.

The Bank, though, has made a small cut to the reserve requirement ratio (RRR):

• 25-basis-point cut to banks' reserve requirement ratiowill release around 530 bn yuan in long-term liquidity Liquidity Liquidity refers to the extent of a financial instrument’s ability to be bought or sold without causing price fluctuations. Thus, if an asset is extremely liquid, it means one can trade that asset in the knowledge that one’s specific dealing won’t create significant movements in the market.This is because there exists such a large number of traders going both long and short, generating huge volume for that particular asset. Liquidity in the FX MarketTake the example of the foreign exchange marke Liquidity refers to the extent of a financial instrument’s ability to be bought or sold without causing price fluctuations. Thus, if an asset is extremely liquid, it means one can trade that asset in the knowledge that one’s specific dealing won’t create significant movements in the market.This is because there exists such a large number of traders going both long and short, generating huge volume for that particular asset. Liquidity in the FX MarketTake the example of the foreign exchange marke Read this Term.
• will take effect April 25
• a 25bp cut is smaller than the usual 50 or 100 bps cut.