China keeps lending benchmark LPR steady for 6th straight month as expected
SHANGHAI, Oct 20 (Reuters) - China kept its benchmark lending rate for corporate and household loans steady for the sixth straight month at its October fixing on Tuesday, encouraged by an extended recovery in the world's second-largest economy from the coronavirus shock.
The one-year loan prime rate (LPR) CNYLPR1Y=CFXS was kept unchanged at 3.85%, while the five-year LPR CNYLPR5Y=CFXS remained at 4.65% - as widely expected by the market.
Most new and outstanding loans are based on the LPR, while the five-year rate influences the pricing of mortgages.
Twenty-five out of 28 traders and analysts, or nearly 90%, in a snap Reuters poll had predicted no change to either the one-year or the five-year LPR.
The rate decision came after the People's Bank of China (PBOC) kept borrowing costs on the medium-term lending facility (MLF) unchanged for the sixth month in a row last week.
MLF, one of the PBOC's main tools in managing longer-term liquidity in the banking system, serves as a guide for the LPR.
Recent data pointed to improving economic fundamentals. Official data on Monday showed China's economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution.
The LPR is a lending reference rate set monthly by 18 banks. The PBOC revamped the mechanism to price LPR in August 2019, loosely pegging it to the MLF rate.
(Reporting by Winni Zhou and Andrew Galbraith Editing by Shri Navaratnam)
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