The 1-year LPR has decreased to 3.45%! How to understand asymmetric interest rate cuts, reducing 10 basis points nationwide | Loans | PR
On August 21st, the market quotation interest rate for the new phase of loans was announced
The one-year LPR dropped to 3.45%, a decrease of 10 basis points from the previous period
LPR remains unchanged at 4.2% over a period of 5 years
The decrease in LPR helps to reduce financing costs
Support the recovery of credit demand
Further enhance the growth momentum of consumption and investment
![The 1-year LPR has decreased to 3.45%! How to understand asymmetric interest rate cuts, reducing 10 basis points nationwide | Loans | PR](https://a5qu.com/upload/images/d892eb4dfb2bcecedc18b4f94fda2778.jpg)
Screenshot from the central bank website
Interest rates were lowered in August! How to understand asymmetric interest rate cuts?
Today, the central bank announced its latest LPR: the one-year LPR is 3.45%, a decrease of 10 basis points from the previous month, and remains unchanged for periods over 5 years. What is LPR? How to view this decline?
Firstly, although LPR is announced by the central bank, its price is not set by the central bank. It is calculated based on quotes from 18 representative commercial banks, such as the Industrial and Agricultural Bank of China and China Construction Bank. Submit it to the central bank once a month. The central bank removes one highest price and one lowest price, and calculates the average of the remaining quotations to obtain the LPR for this month. In short, the monthly LPR is a pricing reference for bank loans.
LPR is divided into two types: 1-year and 5-year or more. More than one year is related to corporate loan interest rates, while more than five years are related to residential mortgage interest rates.
How should we understand that the 1-year LPR has decreased by 10 basis points this month, while the 5-year and above periods have remained stagnant, showing an asymmetric decline?
![The 1-year LPR has decreased to 3.45%! How to understand asymmetric interest rate cuts, reducing 10 basis points nationwide | Loans | PR](https://a5qu.com/upload/images/f0f185a51d6f17642354c956c90e2076.jpg)
From the node perspective, this is the second time in three months that the one-year LPR has decreased after a 10 basis point decline in June. This will significantly reduce the financing costs of enterprises, indicating that monetary policy will increase countercyclical regulation and help accelerate economic recovery.
From the perspective of magnitude, a 10 basis point decrease in 1-year LPR is in line with expectations, while the unchanged 5-year LPR may be lower than expected, but there are also objective reasons. Why? Last Friday, three financial management departments held a meeting, during which it was explicitly requested to "consider the price relationship between increment, stock, and other financial products comprehensively.". Simply put, commercial banks need to face the problem of excessive interest rate differentials between existing and new mortgage loans. In the view of Dong Ximiao, Chief Researcher of Zhaolian and Researcher at the Financial Research Institute of Fudan University, after multiple statements from the financial management department, it is expected that the adjustment plan for deposit and mortgage interest rates with high interest rates will be accelerated. Therefore, in this situation, the LPR for a period of more than 5 years this month will temporarily remain unchanged, which can also help commercial banks stabilize interest rate spreads and maintain reasonable profit growth, thereby enhancing the sustainability of supporting and serving the real economy and the robustness of high-quality development.