Why is the deposit interest rate being lowered? To ease the pressure on banks, and encourage funds to flow into the stock and real estate markets.

According to the central bank notice, the 1-year Loan Prime Rate (LPR) and the LPR for terms of over 5 years have both been lowered by 10 basis points from the previous period. The 1-year LPR has been lowered from 3.10% to 3.0%, and the LPR for terms of over 5 years has been lowered from 3.60% to 3.50%. It is predicted by the Oriental Gold Credit Macro Research Team that the reduction in the quoted LPR for both terms will remain consistent. However, considering the need to further strengthen policies to stabilize the real estate market, regulatory authorities may guide the LPR for terms of over 5 years downward independently through various methods in order to achieve a larger reduction in residential mortgage rates. This is a key measure at the current stage to alleviate the problem of high actual mortgage rates and to continue to stabilize the real estate market. Looking ahead, Wang Qing, chief macro analyst at Oriental Gold Credit, stated that despite the mutual reduction of tariffs in May, the external environment still faces significant uncertainties, and domestic growth-stabilizing policies cannot slacken. Considering that the China-US trade negotiations will still experience a complex and turbulent process, with external demand likely to slow down in the near future and domestic inflation levels remaining low, it is expected that the central bank will continue to implement interest rate cuts in the second half of the year.