MNI BRIEF: China's June LPR Holds Steady

China's Loan Prime Rate held steady on Friday, in line with expectations following the 10 basis-points cut in May, according to a People's Bank of China statement.

Loan Prime Rate remained unchanged at 3.0% for the one-year maturity and 3.5% for the five-year tenor and over on Friday. Both rates fell in May by 10bp after the PBOC lowered the 7-day reverse repo rate – its benchmark policy rate – 10bp to 1.4% on May 8, followed by a 50bp reduction to the reserve requirement ratio on May 15. (See MNI PBOC WATCH: June LPR To Hold, Ample Liquidity Seen)

Advisors and economists recently told MNI the LPR may be cut by 10 basis points in the second half of the year, as the People’s Bank of China considers a 10bp reduction to the 7-day reverse repo rate and a 50bp cut to the reserve requirement ratio (RRR) to counter U.S. tariffs and weak domestic demand. Officials are expected to proceed cautiously, given the repo rate is already at a historic low, and caution over falling into a Japan-style zero-bound trap.