The People’s Bank of China (PBOC) has held the one-year lending prime rate (LPR) at 3.65% and the five-year LPR at 4.30%, in line with analysts’ predictions. The decision was made on the last working day before the Chinese New Year.
Analysts had expected the PBOC to freeze the LPR rate ahead of the holiday, but some predict that a rate cut may occur next month. This comes after the central bank pledged to stimulate the economy and recover from the impact of the COVID-19 pandemic.
According to the Chief Economist from Capital Economics, “It may not be the right time to cut the LPR rate on the last working day before Chinese New Year. But we expect a rate cut may occur next month.”
The one-year LPR rate is considered an index of private sector lending rates, while the five-year LPR rate is considered an indicator of household interest rate direction, including mortgage loan rates.