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the people's bank of china authorized the national interbank funding center to announce that the loan market benchmark rate (lpr) on september 20 was: 3.35% for one year and 3.85% for more than five years, both unchanged from the previous time.

after the federal reserve announced its first rate cut in four years, market expectations for a domestic rate cut have increased. at the interest rate meeting that ended in the early morning of september 19th, beijing time, the federal reserve announced a 50 basis point cut in the benchmark federal funds rate range to 4.75%-5.0%. the extent of the rate cut and the consistent attitude of fed officials towards the 50 basis point rate cut exceeded market expectations.

analysts pointed out that although the fed's interest rate cut has removed the external constraints on my country's monetary easing, my country's interest rate cut still faces internal constraints. according to the second quarter banking and insurance industry operating report released by the state financial supervision and administration bureau, my country's banking industry net interest margin was 1.54% in the second quarter of this year, which has been below the warning line of 1.8% for six consecutive quarters.

on september 5, zou lan, director of the monetary policy department of the people's bank of china, pointed out at a press conference on the theme of "promoting high-quality development" that due to factors such as the speed of bank deposits diversion to asset management products and the extent of the narrowing of banks' net interest margins, there are still certain constraints on further downward movement of deposit and lending rates.

in addition to the net interest margin factor, wang qing, chief macro analyst at orient jincheng international credit rating co., ltd., believes that the current policy effect observation period after the july rate cut is in progress. although the macro data in august showed that the economic operation continued to be stable but weak, it is not ruled out that it is related to the time lag in policy transmission. in july, the central bank lowered the 7-day reverse repurchase rate by 10 basis points and guided the lpr quotes of the two term varieties to be lowered by 10 basis points.

"considering that the downward pressure on the macro economy is generally controllable and various risks continue to be effectively controlled, monetary policy has the conditions to adhere to the 'self-centered' approach. there is no great urgency to continuously lower the policy interest rate in a short period of time and guide the lpr quotation to follow suit." wang qing said.

although the expectation of a rate cut in september was not met, analysts believe that taking into account the current economic situation and price trends, the central bank is likely to lower the main policy interest rate in the fourth quarter.

wang qing predicts that the 7-day reverse repurchase rate is expected to be reduced by 10 to 20 basis points, which will then guide the lpr quotation to follow suit. this is of great significance for achieving the annual economic growth target of about 5.0%, promoting a moderate recovery in the price level, and effectively controlling risks in key areas such as the real estate industry. in addition, with a view to strengthening coordination with fiscal policies and supporting the issuance of government bonds, there is also a possibility of a reserve requirement ratio cut in the fourth quarter.

however, li yujia, chief researcher of the housing policy research center of the guangdong provincial urban and rural planning institute, pointed out that the driving effect of lowering interest rates on the real estate market has been significantly weakened. "from 2022 to now, mortgage loan interest rates have dropped by about 200 basis points. the largest drop was after may 17 (this year), when there was no lower limit on the interest rate for the first set of houses in various places, but the driving effect on commercial housing has been significantly weakened. the main reason is that the market's expectations for housing prices are relatively pessimistic, the number of second-hand housing listings continues to rise, and the trend of exchanging price for volume is difficult to reverse, which cannot be changed by interest rate cuts." he said.

since the beginning of this year, the 1-year and 5-year lprs have fallen by 10 and 35 basis points respectively. among them, the 5-year lpr rate, which is the reference benchmark for personal housing loans and corporate medium- and long-term loans, fell by 25 basis points in february, the largest reduction since the lpr reform. on july 20, the 1-year and 5-year lprs were lowered by 10 basis points respectively.