Under the comprehensive factors of stable policy interest rates, pressure on bank net interest margins, and rising economic prosperity, the two term loan market quoted interest rate (LPR) for January 2025 remains unchanged. Analysts predict that the next phase of LPR changes will seek a balance among multiple objectives such as stable growth, stable exchange rates, and stable interest rate differentials. On January 20th, the People's Bank of China authorized the National Interbank Funding Center to announce that the 1-year LPR is 3.1%, and the 5-year and above LPR is 3.6%. As the pricing benchmark for loan interest rates in China, LPR has remained unchanged for three consecutive months. LPR remained unchanged in January, in line with market expectations Wang Qing, Chief Macro Analyst of Oriental Jincheng, stated that on the one hand, as the pricing basis for LPR, the policy interest rate (7-day reverse repo operation rate) has remained stable since January, which to some extent indicates that LPR will remain unchanged in January; On the other hand, in the third quarter of 2024, the net interest margin of commercial banks dropped to 1.53%, the lowest in history, and banks lack the motivation to lower their LPR quotes by adding points. In 2024, the LPR will decrease three times, with a 1-year LPR decrease of 35 basis points; LPR over a period of 5 years decreased by 60 basis points, the largest decline in previous years. With multiple declines in LPR, the actual loan interest rate has significantly decreased, and the financing cost of the real economy has significantly decreased Dong Ximiao, Chief Researcher of the China Association for Market Regulation, stated. China's loan interest rates are currently at historically low levels. In December 2024, the interest rate for newly issued corporate loans was about 3.43%, a year-on-year decrease of 0.36 percentage points, while the interest rate for personal housing loans was about 3.11%, a year-on-year decrease of 0.88 percentage points. Some analysts believe that the fundamental reason for LPR remaining unchanged is the recovery of economic prosperity. In the fourth quarter of 2024, China's GDP grew by 5.4% year-on-year, exceeding market expectations and achieving a smooth end to the year's economy. Wang Qing stated that after the introduction of a package of incremental policies, the economic prosperity has increased and the real estate market has significantly rebounded, reducing the necessity for further decline in LPR in the short term. Maintaining the LPR unchanged will help stabilize the net interest margin of banks, improve the stability of the banking system and the sustainability of serving the real economy. It will also help alleviate the pressure of the China US interest rate differential and promote the basic stability of the RMB exchange rate Dong Ximiao said. As for the thinking of monetary policy in the next stage, Xuan Changneng, Vice President of the People's Bank of China, said a few days ago that he would adjust and optimize the policy strength and rhythm at the right time according to the economic and financial situation at home and abroad and the operation of the financial market to support the achievement of the annual economic and social development goals. Xuan Changneng stated that he will comprehensively use various monetary policy tools such as interest rates and reserve requirement ratios to maintain sufficient liquidity and ensure a relaxed social financing environment. Strengthen the implementation of interest rate policies, while maintaining the healthy operation of the financial industry, and further reduce the comprehensive financing costs of society. (New Society)