The best lending rate (LPR) is the basic lending reference rate calculated and published by the National Interbank Funding Center authorized by the People's Bank of China, and quoted by representative quotation banks in the form of open market operating rate (mainly referring to the medium-term lending convenience rate) according to the bank's lending rate to the best customers. All financial institutions should mainly refer to LPR for loan pricing.
At present, LPR includes 1 year and more than 5 years. LPR has a high degree of marketization and can fully reflect the supply and demand of funds in the credit market. Using LPR for loan pricing can promote the marketization of loan interest rate and improve the transmission efficiency from market interest rate to credit interest rate.
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Important progress has been made in the interest rate marketization reform;
First of all, the correlation between LPR and market capital supply and demand is significantly enhanced. The LPR of 1 year and over 5 years released in May 2020 was 3.85% and 4.65% respectively, which decreased by 0.4 and 0.2 percentage points respectively since the reform in August last year.
Second, the transmission efficiency of monetary policy has been significantly enhanced. In mid-May 2020, the interest rate of 35.3% new loans was 0.9 times lower than the original benchmark interest rate, which was nearly four times before the LPR reform, and the implicit lower limit of the loan interest rate had been broken.
Third, it effectively promoted the reduction of the real interest rate of loans. The average interest rate of corporate loans in April was 4.8 1%, which was 0.5 1 percentage point lower than that in July 20 19 before the LPR reform.
4.LPR reform has played an important role in promoting the marketization reform of deposit interest rate. The overall interest rate in the loan market went down, and the bank loan income decreased. In order to keep pace with the return on assets, banks will appropriately reduce the cost of debt, and the motivation for high-interest deposits will be reduced. In fact, the interest rate of bank deposits has changed to some extent. Some banks have taken the initiative to reduce the deposit interest rate, and the interest rates of money market funds and other deposit products that are priced in the market have also declined.
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