(Yicai Global) Jan. 20 -- China left its benchmark lending rate unaltered for a ninth month in a row today, just as the market expected. 

The one-year loan prime rate was kept at 3.85 percent, while the five-year LPR remained at 4.65 percent, the People’s Bank of China today. The next fixing will be on Feb. 20.

The market was expecting the LPR to remain unchanged this month after the central bank kept its medium-term lending facility for financial institutions steady last week.

The MLF has kept pace with the one-year LPR since September, a market insider told Yicai Global. In addition, short-term market rates have remained stable recently, and the central bank has little motivation to lower the LPR.

Chinese financial institutions have cut interest rates and waived fees to help the real economy, allowing a reduction last year in financing costs by CNY1.5 trillion (USD232.1 billion), said Wang Qing, chief macro analyst at Beijing-based Golden Credit Rating. In this context, the banking industry’s net interest margin is unlikely to be changed significantly, he added.

The Chinese economy’s V-shaped recovery has shown no signs of weakening since the second quarter of last year, and the growth surge is expected to continue early this year, so there will be no need to cut loan rates, Wang said.

At the same time, there are still many uncertainties in the external economic environment and the domestic economy needs to recover further, especially small and micro enterprises, so the conditions are not present for a rise in interest rates, Wang added.

The PBOC will not lower the reserve requirement ratio before the Spring Festival this year, and it is likely to conduct open market operations to stabilize market liquidity, including reverse repurchases and MLF operations to achieve net investment of funds, according to Xie Yunliang, chief macro analyst at Minsheng Securities.

The central bank has reformed its LPR mechanism to better reflect market changes and to support the real economy since August 2019. The reference rate, which is checked every month, is based on the central bank’s open market operations, especially its medium-term lending facility.

Companies that are offered loans at rates not in line with the LPR are advised to report the lender to official watchdogs and self-regulating industrial bodies.

Editors: Tang Shihua, Tom Litting