The People's Bank of China keeps the lending rate unchanged.

The People's Bank of China, headed by Governor Pan Gongsheng, announced early Monday morning a reduction in the Loan Prime Rate (LPR) that exceeded market expectations, thereby continuing to provide direct support for mortgage rates to stimulate demand in the debt-laden sector and support economic growth.

According to the statement issued, the People's Bank of China cut the one-year LPR by 25 basis points to 3.10%, and also lowered the five-year lending rate to 3.60%, as anticipated.

The decision by the People's Bank of China today to reduce the five-year lending rate comes after the bank pledged last week to take further easing measures to support the economy, amidst ongoing weak inflation data and slowing growth, affirming its commitment to use all monetary policy tools to boost economic growth.

It is noteworthy that the LPR is the benchmark interest rate used in China, determined by the People's Bank every month, usually on the twentieth day, provided there is no holiday. The new LPR takes effect from the first day of the following month.

The LPR serves as a reference rate for banks when setting interest rates for loans issued to their customers, and is calculated based on the rates offered daily by a committee composed of 18 selected commercial banks in China to the People's Bank. This committee includes both local and foreign banks, with different weights assigned to each bank's contributions based on its size and significance in the Chinese financial system.

The LPR is based on the average rates provided by these banks, excluding the highest and lowest rates to minimize volatility and manipulation, and then the remaining rates are ranked, with the average rate becoming the LPR.