Jin Rong Shi Bao·2025-08-08 07:59Core Viewpoint - The recent adjustments in the Loan Prime Rate (LPR) and deposit rates by major banks are aimed at stimulating the real economy and enhancing the quality of development in the banking sector [1][2][4]. LPR Adjustment - The LPR has been lowered for the first time this year, with the one-year rate decreasing by 10 basis points to 3% and the five-year rate also dropping by 10 basis points to 3.5% [1][3]. - This adjustment follows a previous reduction in the policy interest rate by the People's Bank of China (PBOC) on May 7, which was expected to influence the LPR downwards [3][4]. - The PBOC has established the 7-day reverse repurchase rate as a new pricing anchor for the LPR, indicating a shift in monetary policy tools [3][4]. Deposit Rate Adjustment - Major banks, including six state-owned commercial banks, have adjusted their RMB deposit rates, with changes ranging from 5 to 25 basis points [5][6]. - The adjustments include a 5 basis point decrease in the demand deposit rate and a 15 basis point decrease for various fixed-term deposits [5][6]. - This move is seen as a necessary step for banks to lower funding costs and stabilize net interest margins following the LPR decline [7]. Impact on the Real Economy - The dual reduction in lending and deposit rates is expected to lower the overall financing costs for the economy, thereby stimulating investment and production [8]. - The coordinated macroeconomic policies have enhanced market confidence, directing more funds towards capital markets and real enterprises [8]. - The banking sector is encouraged to utilize various structural monetary policy tools to support key areas such as technological innovation, consumption, and small and micro enterprises [8].