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LPR has remained unchanged for three months, and there is still room for further decline

Date: 2022-04-22
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The People's Bank of China authorized the National Interbank Funding Center to announce that on April 20th, the quoted interest rate (LPR) of the loan market was 3.7% for one year and 4.6% for five years or more, which remained unchanged for three consecutive months. Experts said that in April, the MLF interest rate had not been lowered, the overall RRR cut had not been implemented, and external factors were the reasons for the LPR not falling in April, which was consistent with market expectations. Looking ahead, monetary policy will further increase its support for the real economy, and there is still room for LPR to fall.

LPR did not decrease, as expected

As for the reason why LPR did not drop in April, experts believe that the MLF interest rate did not drop in April or was the main reason. At present, the LPR quotation has basically formed a transmission mechanism of 'MLF interest rate reduction-bank comprehensive debt cost improvement -LPR quotation reduction'. Since the MLF interest rate remained unchanged in April, the LPR remained unchanged. Some experts also said that the overall RRR cut has not yet been implemented, and the lack of motivation for LPR quotation banks to cut their quotations is also one of the reasons.

'According to the law since the LPR quotation reform in 2019, it can trigger the quotation bank to lower the LPR quotation by lowering the standard by 0.5 percentage points twice. For example, after two RRR cuts in July and December 2021, the one-year LPR offer in December of that year was lowered by 5 basis points, and a similar situation occurred in 2019. ' Wang Qing, chief macro analyst of Dongfang Jincheng, said.

At the same time, external factors restrict the decline of LPR. Experts believe that it is more difficult to cut interest rates because of the obvious narrowing or even upside down of the spread between China and the United States and the constraint of still high PPI.

In addition, the current low corporate loan interest rate may also be one of the reasons why LPR has not declined. The People's Bank of China recently disclosed that since the beginning of this year, the People's Bank of China has guided the market interest rate down by 0.1-0.15 percentage points, which has driven the corporate loan interest rate down by 0.21 percentage points to 4.4% in the first quarter.

Take multiple measures to reduce financing costs

Looking forward to the future, a prudent monetary policy will further increase support for the real economy and take multiple measures to reduce the financing cost of the real economy. There is still room for the subsequent LPR to fall.

'According to the macroeconomic situation under the current epidemic fluctuation and the real estate operation, it is possible to implement a comprehensive RRR cut again in the second quarter, while the possibility of a slight reduction in MLF interest rate is not ruled out.' Wang Qing expects that the probability of LPR quotation falling by 10 to 15 basis points in the second quarter is high.

Regarding how the follow-up monetary policy will exert its strength to stabilize growth, the People's Bank of China has repeatedly stressed that it will further increase financial support for the real economy, especially for industries seriously affected by the epidemic, small and medium-sized enterprises and individual industrial and commercial households, make reasonable profits to the real economy, and reduce comprehensive financing costs.

Wen Bin, chief researcher of Minsheng Bank, predicts that monetary policy will continue to adhere to the principle of stability, give priority to me, take into account both internal and external factors, give full play to the dual functions of aggregate and structure, increase support for the real economy, and stabilize the basic economy. In order to ensure the smooth flow of logistics and promote the stability of the supply chain of the industrial chain, refinancing for transportation and logistics is expected to be introduced. At present, the internal and external economic situation is becoming more complicated and changeable, which requires the overall consideration of monetary policy in the implementation process.


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