On August 20th, the new LPR (Loan Market Quotation Rate) was released. The People's Bank of China (hereinafter referred to as "the Central Bank") authorized the National Interbank Funding Center to announce that on August 20, the LPR for one-year term was 3.0%, and that for five-year term and above was 3.5%. This month, the LPR of two maturity varieties remained unchanged compared to the previous month, which is in line with market expectations. Under the new monetary policy framework, the 7-day reverse repo rate serves as the main policy rate and becomes the new "pricing anchor" for LPR. By strengthening the coordination between various interest rates, the transmission relationship between short and long interest rates is gradually unblocked. Since the interest rate cut in May, the recent policy interest rate has remained stable, leaving the pricing basis for LPR quotes unchanged. From the perspective of net interest margin, commercial banks are still under pressure, which also limits the downward adjustment of LPR. According to data from the State Administration of Financial Supervision and Administration, as of the end of the second quarter of this year, the net interest margin of commercial banks was 1.42%, a decrease of 0.01 percentage points from the first quarter. Although the deposit interest rate was significantly lowered in May, which played a good role in stabilizing the net interest margin, the downward trend of loan interest rates remains unchanged, and the pressure on commercial banks to stabilize the net interest margin continues to emerge. ”Wen Bin, Chief Economist of Minsheng Bank, told reporters that considering the relative rigidity of costs such as funds, risks, operations, capital, and taxes, there is insufficient space and motivation for the LPR quotation to be lowered separately without reducing policy interest rates. As of now, LPR has remained inactive for three consecutive months. Wang Qing, Chief Macro Analyst of Dongfang Jincheng, believes that this is mainly due to the relatively stable and strong macroeconomic situation in the first half of the year. In the short term, the necessity of strengthening countercyclical regulation by guiding the LPR to be lowered is not high, and it is currently in a policy observation period. For the main ideas of the next stage of monetary policy, the People's Bank of China recently released the "Report on the Implementation of China's Monetary Policy in the Second Quarter of 2025", which proposes to "implement a refined and moderately loose monetary policy". Wen Bin stated that this means that the focus of subsequent monetary policy will be on implementation, and the probability of further easing in the short term is not high. Wen Bin believes that in order to stabilize credit, promote domestic demand, strengthen coordination, and maintain policy continuity and stability, monetary policy will continue to maintain a moderately loose pace in the second half of the year. However, considering that the two fiscal interest subsidy policies effectively reduce the cost of real financing, structural policies can more accurately exert force, avoid capital idling, and the trend of accelerated activation of deposits and mild price recovery, the timing of further reserve requirement ratio and interest rate cuts within the year may be postponed, and the timing of LPR reduction will also be correspondingly delayed. Wang Qing expects that in the process of vigorously boosting domestic demand in the future, there is still room for policy interest rates and LPR quotes to be lowered. It is expected that the central bank may implement a new round of interest rate cuts and reserve requirement ratio cuts at the beginning of the fourth quarter, which will drive down the LPR quotes of two maturity products. In addition, the policy of stabilizing the real estate market in the second half of the year needs to be further strengthened, and the regulatory authorities may promote a greater reduction in residential mortgage interest rates by separately guiding the downward trend of LPR quotes for more than 5 years. (New Society)