LPR reappearance has not been lowered for two consecutive months

 LPR reappearance has not been lowered for two consecutive months

This time, the LPR remains unchanged, which is the second time that the LPR has not been lowered for two consecutive months (may 2020 and June 2020) since the release of the new LPR mechanism. The last time occurred in December 2019 and January 2020.

The LPR quotation in June is likely to remain unchanged. The main reason for this judgment is that the LPR quotation is linked to the MLF level. The MLF continuing interest rate on 15th of this month is the same as that of the last time. According to the historical rule, it is unlikely to reduce the LPR in June. Huang Wentao, chief macro and bond analyst at CSC securities, had previously predicted.

On June 15, the central bank completed the MLF operation in the notice and launched the MLF of 200 billion yuan, but the interest rate unexpectedly remained unchanged at 2.95%. In June, a total of 740 billion yuan of MLF expired.

At the same time, Huang Wentao said that in the near future, the Department banks have taken the initiative to reduce large deposit interest rates, opening up space for LPR reduction, so the possibility of LPR reduction still exists in the future.

It is understood that in the near future, the deposit rates of some commercial banks, including the four major banks, have declined, among which the three-year, five-year and other medium-term and long-term limited deposit rates have declined by a relatively large margin, with the month on month decline of more than 5 basis points in May. At the same time, some small and medium-sized banks have taken the initiative to reduce deposit interest rates for many times since 2020.

The latest MLF operating interest rate has not been adjusted, but the trend of continuously guiding LPR downward to give profits to real enterprises remains unchanged. In recent years, several major banks have lowered the interest rate of large deposit receipt, leading to the decrease of deposit cost, which also provides space for LPR to be lowered. Tang Jianwei, chief researcher of Bank of communications Financial Research Center, also said.

Yang Rong, chief banking analyst of CSC securities, believes that based on the current real economy financing situation and the increasing possibility of repeated epidemic, LPR still has the necessity of going down, while the structural deposit pressure drop and the development of innovative monetary policy tools will reduce the bank end debt cost and provide space for LPR to go down. It is expected that LPR will be reduced by 5bp in July.

Previously, Wang Qing, chief Macro Analyst of Dongfang Jincheng, predicted that MLF would cut interest rates or restart in August, for the following reasons: in the second half of the year, the domestic epidemic will continue to adhere to the import of external prevention and rebound of internal prevention, and the normalization of epidemic prevention will inevitably bring certain impact on peoples economic activities; with the arrival of the graduation season in July, the unemployment rate of urban survey may rise to 6.0% again after August And so on.

In addition, after the executive meeting of the State Council on June 17, it was mentioned that the markets expectation for the end of the month will be greatly increased. If the reduction is successfully implemented, the probability of LPR decline in the next month will be further increased.

In the first half of this year, the central bank has twice lowered the MLF interest rate: on February 17, the one-year MLF cut by 10bp to 3.15%, and on April 15, the one-year MLF cut by 20bp to 2.95%, a total of 30bp.