China switched to a revamped LPR lending benchmark rate on August 20 for banks to use when setting rates on new loans, instead of the central bank’s existing benchmark one-year lending rate.

China’s central bank vice governor Liu Guoqiang said on August 20 that the future interest rate policy focus would be on new Loan Prime Rate (LPR) reforms and that 1-year policy benchmark rates may not be changed in the near term.

There is room for cuts in both the banks’ reserve requirement ratios (RRR) and lending rates, Liu told a group of reporters after a briefing.

China switched to a revamped LPR lending benchmark rate on August 20 for banks to use when setting rates on new loans, instead of the central bank’s existing benchmark one-year lending rate.

But China will not scrap the benchmark lending rate for the time being, said Liu, adding that policymakers still need time to observe effects of LPR reform.

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