China's benchmark lending rates were left unchanged at the monthly fixing on 20 January 2025, with the one-year Loan Prime Rate (LPR) held at 3.10% and the five-year LPR at 3.60%. It was the third consecutive month in which both rates were kept on hold, and the first fixing of 2025.
The two rates were last changed on 21 October 2024, when both were lowered by 25 basis points as part of the People's Bank of China's (PBoC) broader easing effort announced in the autumn. The benchmarks were then held at the November and December 2024 fixings.
HOW THE LPR IS SET
The LPR is compiled from quotes submitted by a panel of designated banks before 9:00 a.m. on the 20th of each month and published the same day. The one-year rate is the reference for most corporate and household loans in China, while the five-year rate is the main benchmark for mortgage pricing.
The five-year rate was cut three times during 2024, for a cumulative reduction of 60 basis points, while the one-year rate was lowered twice.
POLICY STANCE FOR 2025
The January hold came after China's Central Economic Work Conference in December 2024 set out a shift to a moderately loose monetary policy stance for 2025 and called for timely cuts to banks' reserve requirement ratios and interest rates. Lower LPRs feed directly into corporate financing costs and the rates paid by households on new and existing mortgages.
The decision leaves the PBoC's headline lending benchmarks unchanged at the start of 2025, with the next monthly fixing due on 20 February.