Central Bank of China lowered annual base rate

By Alimat Aliyeva

The People's Bank of China (Central Bank) has reduced the loan rate for one year for first-class borrowers (LPR, loan prime rate), in the next month it will be 3.1% (previously this figure was 3.35%), Azernews reports.

It is clarified that for loans for five years, the rate has also been reduced to 3.6% (previously - 3.85%). A decrease in the LPR, adjusted on the 20th of each month, leads to a decrease in the cost of loans for companies and consumers. Using this tool, the authorities are able to influence the activity of market participants and stimulate the development of the national economy.

LPR affects the level of repayments on issued and new loans. In 2023, the annual rate was lowered twice: the first time in June (to 3.55%), the second in August (to 3.45%), and in 2024 - only once, in July (to 3.35%).

The interest on debt obligations for five years determines, among other things, the cost of mortgage loans. In 2023, it changed once, falling by 0.1 percentage points in June (to 4.2%), and twice this year: in February (to 3.95%) and July (to 3.85%).