Last month, new bank lending hit its lowest in nearly 4-1/2 years and missed market forecasts by a big margin.
The loan prime rate , which banks normally charges their best clients, is set on the 20th of each month, when 18 designated commercial banks submit their proposed rates to the People's Bank of China.
Most new and outstanding loans in China are based on the one-year LPR, which currently stands at 3.70%. The five-year rate, now at 4.60%, influences the pricing of mortgages. "Although PBOC kept its MLF rate unchanged in May, we expect China to lower its LPR fixing this week due to falling banks' funding costs," he said, noting a reduction to banks' deposit rate ceiling in April should have effectively lowered lenders' liability cost.
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