PBoC reforms rates mechanism in bid to cut funding costs

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The People’s Bank of China

China’s central bank has unveiled a key interest rate reform in an attempt to improve monetary policy transmission and push down funding costs for smaller companies, after new lending fell sharply in July.

The People’s Bank of China will revamp the loan prime rate (LPR) and urge commercial banks to use LPR pricing by incorporating the new rate into its macro-prudential assessments.

The benchmark rate, LPR, will be linked to the rate on the PBoC’s open market operations, such as the medium-term

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