China’s key benchmark rate for lending by commercial banks has declined for the first time in the more than 19 months since the end of the Wuhan lockdown.
The loan prime rate’s issued by China’s National Interbank Funding Center (全国银行间同业拆借中心) on 20 December were 3.8% for the 1-year LPR and 4.65% for the 5-year LPR.
While the 5-year LPR remained unchanged compared to November, the 1-year LPR in December marked a decline of 5 basis points compared to the reading of 3.85% for the previous month.
Prior to December China’s LPR’s had remained at the same level for 19 consecutive months since April 2020, when the 1-year LPR fell by 20 basis points compared to the March reading of 4.05% to 3.85%, and the five year LPR fell by 10 basis points from 4.75%.
April 2020 was the same month that saw the rescinding of lockdown measures in Wuhan – the Chinese city first hit by COVID-19.
The loan prime rate (LPR) (贷款市场报价利率) in China is the lending rate provided by commercial banks to their highest quality customers, and serves as the benchmark for rates provided for other loans.
At present the LPR reporting group is comprised of 18 commercial banks in China, including an original core group of 10 national banks, plus two municipal commercial banks, two rural village commercial banks, two foreign invested banks and two privately operated banks.
The People’s Bank of China (PBOC) has authorised the National Interbank Funding Center (全国银行间同业拆借中心) to serve as the designated publisher of the LPR.
The Center publishes the LPR at 9:30 am on the 20th of each month, after first collecting quotes from the group of reporting banks and calculating the average of these quotes following exclusion of the lowest and highest quotes.