The unchanged LPR in July meets expectations and there is still room for further reductions this year.

Looking ahead, it is widely expected in the industry that there is still room and possibility for further reduction in the LPR within the year. Wen Bin, Chief Economist at Minsheng Bank, predicts that there is a high probability of another reserve requirement ratio cut and interest rate cut at the end of the third quarter or in the fourth quarter, during which the LPR is expected to follow suit with a simultaneous reduction to support the stable credit process. Considering the continued pressure on banks' net interest margins, efforts will also be made to promote a decrease in the overall social financing cost, focusing more on reducing non-interest costs and ensuring smooth transmission of interest rates. Wang Qing, Chief Macroeconomic Analyst at Eastern Jin Cheng, predicts that the external environment will continue to face significant uncertainty in the second half of the year, with further room for policy rate and LPR cuts. It is expected that the central bank will continue to lower interest rates in the second half of the year, leading to a reduction in the LPR quotations for two maturity varieties.