"No rate cut"! China's 1-year and 5-year LPR rates remain unchanged in August
The 1-year Loan Prime Rate (LPR) is 3.35%, while the LPR for 5 years and above is 3.85%, both unchanged from the previous values
On August LPR quotation released, the 1-year and 5-year LPR rates remain unchanged.
On Tuesday, August 20, the People's Bank of China authorized the National Interbank Funding Center to announce that the loan market quoted interest rate (LPR) on August 20, 2024 is: 1-year LPR at 3.35%, and 5-year LPR and above at 3.85%. The above LPR is valid until the next LPR release.
The central bank stated in the second quarter monetary policy report that the LPR quotation is shifting towards more reference to the central bank's short-term policy interest rates, gradually clarifying the transmission relationship from short to long-term rates.
Previously, LPR was mainly formed by adding points to the MLF operation rate. However, in July, the central bank maintained the rate during the regular mid-month MLF operation, followed by a reduction in the 7-day reverse repurchase operation rate and LPR. This shows that the status of the reverse repurchase operation rate as a policy rate is rising, and the previous role of MLF is fading. This month's Medium-term Lending Facility (MLF) operation has been postponed to the 26th.
Analysts believe that the stable LPR is in line with the policy signal transmitted by the central bank, but the market is also concerned about whether there will be new stimulus measures in the future.
Last week, Pan Gongsheng of the People's Bank of China stated in a media interview that while maintaining price stability and promoting moderate price increases are important considerations, policy consistency will be maintained without overly loosening.
In response, Dong Ximiao, Chief Researcher at Zhonglian, interpreted that there is a close relationship between monetary policy and price changes, and one of the monetary policy objectives is to promote moderate price increases. Emphasizing "moderate" and "maintaining policy consistency without overly loosening" indicates that while monetary policy promotes price increases, it will maintain a stable tone and avoid "flooding" to rapidly push prices up, such as significant reserve requirement cuts or interest rate reductions