In H2, China's LPR still has room to fall — Herald

The 21st Century Business Herald claimed, citing analysts, that "China's financial regulators are anticipated to guide down banks' capital expenses to drive down their Loan Prime Rate quotations in H2, consequently decreasing loan interest rates for

June 21, 2022 - 12:43 PM 254 views

In H2, China's LPR still has room to fall — Herald

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© In H2, China's LPR still has room to fall — Herald

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The 21st Century Business Herald claimed, citing analysts, that "China's financial regulators are anticipated to guide down banks' capital expenses to drive down their Loan Prime Rate quotations in H2, consequently decreasing loan interest rates for firms and people."

Key Comments

"LPR remained at 3.70 percent for one-year maturities and 4.45 percent for five years this month, based on the rate of the PBOC's Medium-term Lending Facility and quotations supplied by 18 banks." Due to the Fed's predicted considerable monetary tightening, the PBOC is less likely to decrease the MLF rate."

"Through deposit interest rate reform and reserve requirement ratio decreases, there is opportunity for a 5-10 bps cut in the one-year LPR and a 10-15 bps cut in the five-year LPR to lower banks' expenses."

The Market Reaction

The USD/CNY exchange rate was last noted at 6.6753, down 0.22 percent on the day. The cross is being weighed down by the US dollar's decline.

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