Asian Economic Calendar: Key event for 20 November 2023 is the PBoC interest rate decision

The People’s Bank of China headlines an otherwise bare calendar for the session today:

Due at 8.15 pm US Eastern time on Sunday evening, November 19.

No change in the Loan Prime Rates (LPRs)are expected.

Last week the Medium-term Lending Facility (MLF) rate was left unchanged:

The MLF rate sets the scene for the monthly Loan Prime Rate (LPR) setting. Current LPR rates are:

  • 3.45% for the one year
  • 4.20% for the five year

The PBOC’s Loan Prime Rate (LPR):

  • Its an interest rate benchmark used in China, set by the People’s Bank of China each month on the 20th.
  • The LPR serves as a reference rate for banks when they determine the interest rates for (primarily new) loans issued to their customers.
  • Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.
  • Its calculated based on the interest rates that a panel of 18 selected commercial banks in China submit daily to the PBOC.
    • The panel consists of both domestic and foreign banks, with different weights assigned to each bank’s contributions based on their size and importance in the Chinese financial system.
    • The LPR is based on the average rates submitted by these panel banks, with the highest and lowest rates excluded to reduce volatility and manipulation. The remaining rates are then ranked, and the median rate becomes the LPR.

This article was written by Eamonn Sheridan at Source