Create LPR reform new lows since the reform!What does the interest rate of corporate loans drop to 4.05%?

Recently, the Department of Monetary Policy of the People's Bank of China published an article saying that since the reform of the loan market quotation interest rate (LPR), corporate loan interest rates have fallen from 5.32 % in July 2019 to 4.05 % in August 2022, the lowest level since the statistics. The article mentioned that the current regular deposit interest rate in my country is about 1 % to 2 %, and the loan interest rate in my country is about 4 % to 5 %. The real interest rate is slightly lower than the potential actual economic growth rate, and it is at a relatively reasonable level.

What is the background of the lowest level of corporate loan interest rate creation? How does the low loan interest rate innovation affect the enterprise and residents? Will the loan interest rate continue to fall? Let's look at this issue of Quick Questions ↓↓↓

Question: What is the background of the lowest level of corporate loan interest rate creation?

Answer: Interest rates are the price of funds. It is an important macroeconomic variable. It determines the flow of funds and has important orientation for macroeconomic equilibrium and resource allocation. Since the 19th National Congress of the Communist Party of China, the People's Bank of China has continued to deepen the market -oriented reform of interest rates in accordance with the decision -making deployment of the Party Central Committee. Focus on promoting the reform of the loan market quotation interest rate (LPR), establish a market -oriented adjustment mechanism for deposit interest rates, and promote the actual loan interest rate to decline significantly by reform.

On the one hand, promote the reform of the loan market quotation interest rate (LPR). In August 2019, the People's Bank of China promoted the reform and improvement of the LPR quotation. After the reform, the LPR is formed by the market -oriented quotation based on factors such as the cost of funds, market supply and demand, and risk premiums based on the loan interest rate of the highest quality customer, and comprehensively considering factors such as the cost of funds, market supply and demand, and risk premiums.

At present, LPR has become the price benchmark for bank loan interest rates, and most of the loans of financial institutions have referred to LPR pricing. The LPR is formed by the offer of the bank, which can fully reflect the changes in market supply and demand, and the marketization is higher. In the context of the overall market interest rate, it is conducive to promoting the reduction of actual loan interest rates. Since the LPR reform, corporate loan interest rates have fallen from 5.32 % in July 2019 to 4.05 % in August 2022, the lowest level since the statistics.

On the other hand, the market -oriented adjustment mechanism of deposit interest rates is established. In June 2021, the People's Bank of China guided the market interest rate pricing self -discipline mechanism to optimize the upper limit of the deposit interest rate self -discipline. It was changed from the formation of the benchmark interest rate of the deposit to the increase. In April 2022, the Bank of Self -Regulatory Mechanism Bank referred to the bond market interest rate represented by 10 -year Treasury bond yields and the loan market interest rate represented by a one -year LPR, and reasonably adjusted the level of deposit interest rates.

With the gradual improvement of the market -oriented mechanism of deposit interest rates, in mid -September 2022, state -owned commercial banks took the initiative to reduce the deposit interest rate and drive other banks to follow up. Many banks have adjusted the deposit interest rate for the first time since October 2015. This is the active behavior of banks to strengthen asset -liability management and stable liabilities, showing that the market -oriented reform of deposit interest rates has taken an important step forward.

Question: What impact does the low loan interest rate impact on enterprises and residents?

Answer: At present, the foundation of economic recovery is still not firm, and macro policies must actively act in expanding demand. How to expand demand? Specific to monetary policy, we must increase financial support for the real economy, and work hard to support the effective demand for credit. Among them, the comprehensive financing cost of enterprises and personal consumer credit costs are two powerful starting points. On the one hand, it is related to the "blood veins" of hundreds of millions of market entities, and the other is related to the consumption willingness of tens of millions of residents and families.

As an important step in deepening the market -oriented reform of interest rates, the loan market quotation interest rate (LPR) has gradually replaced the benchmark interest rate of loans to become the "anchor" of loan interest rate pricing. It determines the level and direction of bank loan interest rates, which directly affects financing of various market entities. cost. The reform and improvement of the LPR formation mechanism is to adhere to the use of deepening reforms to promote the decline in actual interest rate levels and strive to solve the problem of "financing difficulties". At the same time, the LPR quotation better reflects the central bank's monetary policy orientation and market capital supply and demand status. It has become the main reference for bank loan interest rate pricing, and has been internalized into the bank's internal funds transfer pricing. Completely breaking, monetary policy transmission channels can be effectively dredged.

Since the beginning of this year, LPR has fallen three times, and the 1 -year LPR has fallen by 20 basis points, and LPR has decreased by 35 basis points over 5 years. The downward LPR of one -year and 5 -year LPR will effectively boost short -term and medium -term credit demand. On the one hand, it can guide financial institutions to continue to reduce the financing costs of market entities, reduce the burden on enterprises and residents, stimulate financing demand, and enhance the stability of total credit growth; on the other hand, it also helps to stabilize the confidence and expectations of enterprises and residents. In particular, the significant decline in LPR above 5 years will help reduce the cost of buyers and form a combination of measures with the support of real estate enterprises' financing, which is of positive significance for stabilizing the real estate market. Reducing the burden on most loan buyers will also help improve the willingness and ability of residents to consume.

Q: Will the loan interest rate continue to fall?

Answer: Looking forward to the future, experts believe that LPR still has room for reduction. The main reasons are: the domestic economy maintains the recovery trend, the quality and efficiency of banks are continuously improved, and the banking department has maintained profitability; the interest rate reform has opened up the market -oriented adjustment space of deposit interest rates to a certain extent; the monetary policy remains flexible and moderate. However, LPR adjustment requires comprehensive assessment of the needs of real economic financing, real estate recovery, and bank net interest margins. Experts said that since the epidemic occurred, although my country's macro policy has increased the counter -cycle and cross -periodic regulation, in general, monetary policy is still relatively stable, and it has not implemented loose means such as "large water irrigation". In the next step, my country's monetary policy still has room for power. Monetary policy should be strengthened from multiple aspects, more strongly boosting confidence and expectations, more powerful economic growth, and continuously helping economic and social recovery.

In addition, experts believe that, in view of the mild and controllable domestic inflation situation in the future, with the support of economic fundamentals, the risk of rapid depreciation of the RMB exchange rate from the US dollar is not great, and the policy interest rate will not have substantial obstacles to the end of the year.

The People's Bank of China said that my country's monetary policy has always adhered to me as the main, and it is based on static braking to guide the market interest rate levels to decrease steadily, and the effect is better. At present, my country's regular deposit interest rate is about 1 % to 2 %, and the loan interest rate is about 4 % to 5 %. The real interest rate is slightly lower than the potential economic growth rate. It is at a relatively reasonable level. It is the optimal strategy to leave space. At present, my country's economic growth, price level, employment status, and international balance of income and expenditure balance are running in a reasonable range, and it has also fully verified that my country's current interest rate level is generally in a reasonable range.

In the next step, the People's Bank of China will continue to advance the market -oriented reform of interest rates, continuously release the effectiveness of LPR reform, strengthen the supervision of deposit interest rates, give full play to the important role of the market -oriented adjustment mechanism of deposit interest rates, promote the marketization of interest rates, improve market -oriented interest rate formation and conduction Mechanism, optimize the central bank's policy interest rate system, play a regulatory role of interest rate leverage, promote the optimization of financial resources, and create a good environment for high -quality economic development.

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