PBOC leaves Loan Prime Rates unchanged in September

Lallalit Srijandorn FXStreet

The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Monday. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively.

Market reaction to the PBoC interest rate decision

At the time of writing, the AUD/USD pair is trading 0.12% lower on the day to trade at 0.6583.

PBOC FAQs

What does the People's Bank of China do?

The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.

Who owns the PBoC?

The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.

What are the main policy tools used by the PBoC?

Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.

Are private banks allowed in China?

Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD extends decline to fresh monthly lows below 0.7100

AUD/USD trades south of 0.7100 early in the Asian session on Thursday, as the US Dollar soared following the Federal Reserve's monetary policy announcement. The Fed delivered a 25 bps rate hike as expected, while policymakers expressed concerns about inflation leading to bets of additional hikes before year-end.

USD/JPY flirts with 156.00 after Fed's hawkish hike

USD/JPY trades at fresh weekly highs around 156.00 early on Thursday, as the US Dollar soared following the Federal Reserve's monetary policy announcement. The US central bank hiked the benchmark rate by 25 bps as expected, while Chair Kevin Warsh delivered quite hawkish comments in the press conference that followed the decision.

Gold dips towards $4,250 in the Fed's aftermath

Gold erased intraday gains and turned negative following the Federal Reserve's decision to hike rates by 25 bps as expected. The XAU/USD pair briefly surpassed the $4,360 level, now accelerating its slide towards the $4,250 price zone. Hawkish words from Chair Kevin Warsh fueled bets for additional hikes before year-end.

Fed raises 2026 interest rate forecast to 4.1%, lifts PCE inflation projections

The Federal Reserve's (Fed) latest dot plot projections, released by the Federal Open Market Committee (FOMC) on Wednesday, show policymakers now expect interest rates to stand at 4.1% by the end of 2026, up from 3.8% in June.

Fed recap: One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.