China de facto key rate LPR 0.25%p ↓...liquidity supply

China has cut its "de facto benchmark interest rate," the LPR, in three months as part of various stimulus measures to achieve its "around 5%" growth target this year.

The People's Bank of China announced today that it will lower the five-year LPR, which serves as a mortgage basis, to 3.6%, from 3.85%, and the one-year LPR, which serves as a general loan basis, to 3.1%, from 3.35%.

The People's Bank of China has so far maintained the same level since July when it cut its five-year LPR by 0.1 percentage points, or p, from 3.95% to 3.85% and its one-year LPR by 3.45% to 3.35%, respectively.

Earlier, in a speech at the "2024 Financial District Forum" held on the 18th, People's Bank President Pang Sung said that front-line commercial banks cut deposit rates, and predicted that "LPR, which will be announced on the 21st, is also expected to be 0.25% lower."

Pan said at the time, "We cut the reserve ratio (RRR) by 0.5%p on September 27th, and we expect to cut it by another 0.25-0.5%p by taking a look at the market liquidity situation before the end of the year."

The People's Bank of China lowered its reserve rate by 0.5%p ahead of China's biggest holiday, the National Day holiday (Oct. 1-7), to supply 1 trillion yuan in long-term liquidity and 192 trillion won in our money to the market, and also cut the policy rate of 7-day reverse repurchase agreement and short-term liquidity support window (SLF) loan rates, which lend short-term funds to commercial banks, by 0.2 percentage points.