The People’s Bank of China left its benchmark 1-year Loan Prime Rate (LPR) unchanged for the second consecutive month at 4.15% on January 20th 2020. The 5-year LPR, generally used for new mortgage loans, was also left on hold at 4.8%. The central bank injected fresh funds via it medium-term lending facility (MLF) loans into the banking system last week. On December 28th 2019, the central bank decided to start using the key loan prime rate (LPR) as a new benchmark for pricing outstanding floating-rate loans. From January 1st, financial institutions are not allowed to sign floating-rate loan contracts that are priced in the old rates but should use the LPR instead. Since the one-year LPR became the official key rate in August 2019, it was already cut 3 times.
