Original title: The October quotation remains unchanged, and the loan base interest rate still has room to reduce
The People’s Bank of China authorized the National Interbank Funding Center to announce that the loan market quoted interest rate (LPR) on October 20 was: 1-year LPR was 3.65%, and LPR for more than 5 years was 4.3%, both of which remained unchanged.
The LPR quotation this month remained unchanged, which was basically in line with market expectations. “The LPR interest rate is linked to the MLF interest rate. In the context that the MLF interest rate has not been adjusted, the pricing basis of the LPR quotation in October has not changed.” said Wen Bin, chief economist of China Minsheng Bank. On October 17, the People’s Bank of China renewed the one-year medium-term loan facility (MLF) of 500 billion yuan in the same amount, and the winning interest rate remained unchanged at 2.75%.
Wen Bin analyzed that in the short term, the motivation to lower the LPR quotation again is not strong. With the accelerated implementation of a series of growth-stabilizing policies, financial data improved significantly in September, and the effective demand for credit rebounded. The effect of the follow-up policy will continue to be effective, and it will still be in the observation period of the policy effect in the short term. Under the background that the LPR has been asymmetrically lowered in August and the effect is emerging, the motivation for the LPR quotation to be lowered again in the short term is not strong.
The record low net interest margin of banks is also one of the factors for the lack of motivation for the quotation banks to further reduce the LPR in the short term. Wang Qing, chief macro analyst at Orient Jincheng, said that the recent DR007 (7-day repurchase rate of inter-bank depository financial institutions pledged with interest rate bonds) and commercial banks (AAA-level) 1-year interbank certificate of deposit maturity yield both There is a slight upward movement, which to a certain extent weakens the motivation of the quotation line to actively compress the LPR quotation and add points.
After the LPR has been lowered several times during the year, Dong Ximiao, chief researcher of China Merchants Union Finance, believes that the guiding effect of the downward LPR on loan interest rates is emerging, and its superimposed effect needs further observation. Moreover, the current loan interest rate is already at a historically low level. Although it is necessary to reduce the LPR, it is not a top priority.
Wang Qing believes that the current macro policy is still continuing to exert its efforts to stabilize growth, and one of the key points is to continue to guide the financing costs of the real economy to decline. After the effect of the lowering of LPR quotations in August gradually appeared, the flat LPR quotations in October will not affect the downward trend of financing costs of the real economy.
“The market still expects a decline in LPR over a 5-year period.” Dong Ximiao said that since the beginning of this year, the LPR over a 5-year period has dropped 3 times for a total of 35 basis points, which will help reduce residential consumption expenditure and boost residential consumption demand. However, in some areas, residential housing consumption demand is still relatively weak, so the market still expects a decline in LPR over a 5-year period. Wang Qing also believes that there is still room for downside for LPR with a period of more than 5 years. Since September 15, large state-owned banks have launched a new round of deposit interest rate cuts, and have led other banks to follow suit. On the whole, this round of deposit interest rate cuts is significantly larger than the first deposit interest rate adjustment of the year in April this year. This will effectively reduce the bank’s capital cost and provide incentives for the quotation bank to lower the LPR quotation and add more points.
Dong Ximiao believes that under the circumstance that commercial banks reduce deposit rates and reduce debt costs, there is still room for LPR to decline, so as to further stimulate residential housing consumption demand and promote the stable and healthy development of the real estate market. (Chen Guojing)