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3mo ago

China Keeps Benchmark Loan Prime Rates Unchanged in June

The move follows a 10 basis point rate cut in May designed to support economic growth in the face of U.S. trade frictions.

The headquarters of the People's Bank of China, the central bank, is pictured in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee/File Photo
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Overview

  • The People’s Bank of China held its one-year loan prime rate at 3.00% and its five-year LPR at 3.50% for the June fixing.
  • All 20 participants in a Reuters poll correctly forecast no change to either rate as markets evaluated the impact of last month’s cut.
  • The one-year LPR underpins the pricing of most corporate and household loans in China, while the five-year rate serves as the benchmark for mortgage rates.
  • May’s 10 basis point reduction marked Beijing’s first rate cut since October 2024 and aimed to cushion the economy against the effects of Sino-U.S. trade tensions.
  • Major commercial banks trimmed their deposit rates to protect net interest margins amid the central bank’s monetary policy adjustments.