The loan market quotation rate (LPR) has remained unchanged for six consecutive months. On April 21, the People's Bank of China authorized the National Interbank Offering Center to announce that the loan market quotation rate on April 21, 2025 is: the 1-year LPR is 3.1%, and the LPR for more than 5 years is 3.6%.

  The LPR quotation in April continued to "stand still", in line with market expectations. Wang Qing, chief macro analyst of Oriental Jincheng, said that on the one hand, the policy interest rate has remained unchanged since April, which means that the pricing basis of the LPR quotation this month has not changed, which has largely predicted that the LPR quotation in April will remain unchanged. On the other hand, the current net interest margin of banks is at a historical low, and the quotation bank has insufficient motivation to actively lower the LPR quotation points. "Overall, the LPR quotation has remained unchanged since the beginning of the year, which is fundamentally due to the strong economic trend in the first quarter. Therefore, although the current monetary policy tone has changed from stable to moderate easing, the urgency of lowering the LPR quotation is not strong."

  Since November 2024, the LPR of the two-term varieties has remained unchanged for six consecutive months. In 2024, the market price interest rates for 1-year and 5-year loans fell by 35 basis points and 60 basis points respectively.

  When studying the main ideas of monetary policy in the next stage, the first quarter of 2025 regular meeting of the People's Bank of China pointed out that it is recommended to increase the intensity of monetary policy regulation, improve the forward-looking, targeted and effective monetary policy regulation, and reduce the reserve requirement ratio and interest rate at the right time according to the domestic and international economic and financial situation and the operation of the financial market.

  In this regard, Wen Bin, chief economist of China Minsheng Bank, said that in the case of rising external uncertainty and the effectiveness of internal policies in the observation period, the characteristics of the "camera decision" of the central bank's monetary regulation will continue to be reflected.

  Wang Qing predicts that based on the current changes in the external economic and trade environment and the domestic real estate market and price trends, the time for "cutting the reserve requirement ratio and interest rate cuts" in the second quarter is ripe, and it is not ruled out that it is possible to advance to April. In the future, LPR quotations will bring certain pressure to banks to narrow the net interest margin, which will be alleviated mainly by guiding the downward trend of deposit interest rates and comprehensively reducing bank capital costs.

  "In the short term, the risk of downward interest rates in the bond market adjusted after adjustment has been released to a certain extent. Coupled with weak prices and reduced exchange rate pressure, the necessary conditions for further easing are met at present." Xiong Yuan, chief economist of Guosheng Securities, analyzed that in view of the pressure of bank interest rate spread, lowering loan interest rates should simultaneously reduce deposit interest rates. Judging from the recent four interest rate cuts, three deposit interest rate cuts were preceded by the LPR price cuts.

  In addition to lowering interest rates, there is room for a reserve requirement ratio cut. Dong Ximiao, chief researcher of China Merchants Union, believes that the central bank may implement a comprehensive reduction in the reserve requirement ratio in the second quarter, further sending a signal to boost investor confidence and maintain stability in the capital market. (Xiang Jiaying)

[Editor in charge: Nie Jing]