China's loan prime rate (LPR) for March was released on March 20, and the LPR for 1 year and 5 years or more was not adjusted. The one-year loan prime rate (LPR) in March was 3%, compared with the previous value of 3%. LPR has remained unchanged for ten consecutive months.

Why not move? There are two main reasons:

First, the pricing basis of LPR - that is, the bank's cost of funds has not changed recently;

Second, the current interest rate level is already at a historical low, and the policy effect is emerging.

In fact, corporate financing costs are currently at multi-year lows. According to the latest data from the central bank, in January 2026, the average interest rate on corporate loans was about 3.2%, down 2.4 percentage points from the high point before the start of this round of interest rate cut cycle in the second half of 2018.

This reflects that the current moderately loose monetary policy is effectively reducing the financing cost of the real economy, and financial support for the economy is still sufficient.

| LPR continues to remain unchanged, and monetary policy has entered an "observation period"

On March 20, the LPR (loan market quotation rate) for 1 year and more than 5 years remained unchanged, in line with market expectations. There are two main direct reasons behind this:

First, the pricing basis has not changed.

LPR follows the policy interest rate, and the central bank's 7-day reverse repo rate has not moved recently, so bank quotations are naturally "on hold".

Second, banks do not want and find it difficult to take the initiative to cut interest rates.

Although the central bank injected 1.9 trillion yuan of liquidity into the market through MLF and other tools before the Spring Festival, resulting in a slight decline in interbank financing costs, the banks' own "profit margins" are already very thin.

As of the end of the fourth quarter of 2025, the net interest margin of commercial banks was only 1.42%, the lowest in history. Coupled with the repricing of a large number of loans at the beginning of the year (interest rate cuts), bank profits will be under greater pressure in the first quarter of 2026.

Therefore, even if the cost of funds is slightly reduced, banks have no incentive to take the initiative to lower the LPR.

The deeper reason is that the economy is off to a good start, and the policy does not need to "step on the accelerator" for the time being.

From January to February this year, exports exceeded expectations, consumption and investment picked up in an all-round way, especially in the "new quality productivity" fields such as high-tech manufacturing, the overall economy started steadily, and the urgency of stable growth was not high.

At the same time, the central bank actually took action in January - launched a package of structural monetary policies, focusing on supporting key areas such as scientific and technological innovation and small and micro enterprises.

On the whole, the current monetary policy is in a period of effect observation: not in a hurry to cut interest rates, first see how the existing policies are implemented and whether the economy can continue to improve. Therefore, it is reasonable that LPR and policy interest rates remained stable in the first quarter.

Monetary policy continues to be "loose" this year, and interest rate cuts are expected to be implemented in the middle of the year

This year's government work report makes it clear that it is necessary to continue to implement a moderately loose monetary policy, focusing on stabilizing growth, promoting consumption, expanding investment, and promoting a moderate recovery in prices.

How to do it? The central bank will flexibly use various tools such as RRR cuts and interest rate cuts to maintain sufficient market liquidity and match the growth of money and credit with economic development and inflation targets.

Based on the current economic situation, it is likely that there will be a full rate cut this year, around the middle of the year, and the range is expected to be 10 to 20 basis points (i.e. 0.1%–0.2%). Once the policy interest rate is lowered, the LPR (that is, the interest rate used for everyone's mortgages and corporate loans) will also decline.

Why is there room for rate cuts now?

On the one hand, domestic prices are still low - although CPI (consumer prices) will rebound due to geopolitical conflicts and anti-"involution" policies, the overall increase is still moderate.

On the other hand, the Fed is likely to continue to cut interest rates this year, the pressure on the interest rate differential between China and the United States has decreased, and the constraints of the RMB exchange rate on domestic monetary policy are weakening.

This means that China's monetary policy has enough room to operate and can support the real economy and deal with external uncertainties by cutting interest rates moderately without causing financial risks.

When the economy is stable, the policy should be observed first

Since June 2025, the LPR (loan market prime rate) has remained unchanged for many months, and there are solid economic reasons behind it.

In 2025, despite challenges such as external economic and trade pressures and real estate adjustments, China's economy will remain stable, exports will continue to be strong, and "new quality productivity" such as high-tech manufacturing will grow rapidly, and the annual growth target will be successfully completed.

Entering 2026, the central bank is not idle. In January, a package of structural monetary policies was launched in advance, focusing on supporting key areas such as scientific and technological innovation and small and micro enterprises, and accurately "drip irrigating" the real economy.

The latest high-frequency data also shows that exports in the first quarter of 2026 are still strong; Prices are recovering moderately, neither deflation nor overheating.

These positive signals give policymakers the confidence to "stand still" - not inaction, but that the economic foundation is stable enough, and the policy can maintain its concentration and observe the effect first.

Therefore, the fact that the LPR remains unchanged for the time being just shows that the current macro policy rhythm is stable and effective.

Jingtai Views | Stable layout, waiting for policies to make further efforts

For stock market investors:

Short-term good for bank stocks: interest rate pressure bottomed out in stages, and asset quality improved.

Medium-term focus on the real estate chain: If the interest rate cut is implemented in the middle of the year, the 5-year LPR cut will directly stimulate the demand for home purchases.

Growth sector (technology, high-end manufacturing): Structural policy support without relying on comprehensive interest rate cuts.

For bond market investors:

short-end interest rates are difficult to fall, and the yield on 10-year Treasury bonds may fluctuate in the range of 2.6%-2.8%; when expectations of interest rate cuts rise in the middle of the year, it may be a window period for allocating long-term bonds

For businesses and residents:

Corporate financing costs are already at a historical low (average 3.2%), and you can take the opportunity to lock in medium and long-term loans; Mortgage borrowers don't worry: if you use a 5-year LPR, there is still hope to usher in a reduction this year, but there is a high probability that you will have to wait until the second half of the year