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Asia, News

China keeps lending benchmark LPR steady for second straight month in Jan

SHANGHAI, Jan 20 (Reuters) – China kept its lending benchmark rate steady for the second month in a row on Monday, after the central bank left borrowing costs of medium-term loans unchanged earlier this month.

The one-year loan prime rate (LPR) was unchanged at 4.15% from the previous monthly fixing. The five-year LPR also remained the same at 4.80%.

A Reuters snap survey last week showed that China’s financial markets were nearly evenly divided over whether the benchmark lending rate would be lowered this month in a further bid to support the sluggish economy or kept steady.

The mixed views came as the People’s Bank of China (PBOC) injected fresh funds via it medium-term lending facility (MLF) loans into the banking system last week but left the interest rate unchanged.

MLF, one of the PBOC’s main tools in flexibly managing longer-term liquidity in the banking system, now serves as a guide for the new LPR. The interest rate on the one-year MLF now stands at 3.25%.

The LPR is a lending reference rate set monthly by 18 banks. The PBOC revamped the mechanism to price LPR in August, loosely pegging it to the MLF rate.

(Reporting by Winni Zhou and David Stanway; Editing by Kim Coghill)

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