Did you know?

On September 20th,when the central bank announced the LPR quotes,everyone was stunned.

The one-year and over-five-year LPR rates remained unchanged from the previous month,still at 3.35% and 3.85% respectively.

This caused quite a stir in the market,with people wondering why we didn't follow the playbook when the Fed cut interest rates.

Actually,this matter should be viewed from multiple perspectives.

First,let's talk about the net interest margin of commercial banks,which is a tough issue.

You see,the net interest margin in the second quarter was only 1.54%,the same as the first quarter.

Although joint-stock banks managed to increase a bit,other banks remained the same,and some were even sliding downwards.

Bankers are feeling the pinch; with less money being made,where is the spare capacity to lower the LPR?

Looking at the loan interest rates,they're already as low as they can go.

The newly issued corporate loans have an interest rate of only 3.57%,which is 8 basis points lower than last month.

The inclusive small and micro loans are even lower at 4.48%; if the interest rates are pressed any further,banks might as well drink the wind.

So,the LPR staying put is understandable.

Don't be surprised,there's a rationale behind the LPR's stability.

Think about it,the LPR has already been cut twice in February and July this year; we need to give it some time to see the effects,right?

Moreover,although the credit and social financing data in August didn't meet expectations,the real estate market is still looking forward to the "Golden September and Silver October," so maybe there will be a splendid turnaround in September and October.

Also,the interest rate anchor is stable.

Now,the LPR is no longer tied to the MLF (Medium-term Lending Facility) but is now mixed with the reverse repo rate.

With the reverse repo rate remaining unchanged,there's naturally no reason for the LPR to be adjusted downward.

However,the LPR staying put doesn't mean it won't move in the future.

You look at the economic situation; stable growth is the top priority.

If the economic recovery is not satisfactory,the move of cutting interest rates might still be used.

After all,reducing the financing costs for the real economy can stimulate domestic demand and invigorate the economy.

The regulatory authorities have also been busy recently,halting "manual interest supplementation," and banks have started to lower deposit interest rates.

This makes banks' pockets a bit lighter,and the motivation to lower the LPR is stronger.

Moreover,the loan interest rates for some high-quality customers are already lower than the LPR; it's not in line with the rules if the LPR isn't adjusted downward.

Speaking of this,we must mention the Fed.

Once they cut interest rates,our monetary policy environment becomes much more relaxed.

As the China-US interest rate differential narrows,the pressure of capital outflow decreases,and the RMB exchange rate stabilizes.

In this way,we have more confidence in cutting interest rates and reserve requirements.

Experts have said that the possibility of lowering reserve requirements in the future is not small.

The central bank might provide banks with long-term,low-cost funds through reserve requirement cuts,helping banks stabilize their liability costs and optimize their liability structure.

In this way,with banks' pockets fuller,the economy becomes more vibrant.

Of course,we can't be too optimistic.

After all,both deposit and loan interest rate cuts face many constraints.

Moreover,the current loan interest rates and personal housing loan interest rates are already at historical lows.

To lower them further would require a lot of effort.

In summary,the LPR's "stand still" has many intricacies.

We need to patiently wait and see how things develop.

After all,the game of the economy is a chess game that needs to be played step by step to win steadily.

We ordinary people just need to follow the policies and live a stable life.