What Is a Benchmark Rate?

The benchmark interest rate is a guideline interest rate for commercial bank deposits, loans, and discounts announced by the People's Bank of China. The deposit rates of various financial institutions can currently rise by 10% on the basis of the benchmark rate, and the loan interest rate can rise by 20%.

Central bank benchmark interest rate

The benchmark interest rate is a commercial bank announced by the People's Bank of China
The interest rate instruments used by the People's Bank of China include:
1. Adjust the central bank's benchmark interest rate, including: re-loan interest rate, which refers to the interest rate used by the People's Bank of China to issue re-loans to financial institutions; rediscount interest rate, which refers to the re-discount interest rate of financial institutions holding the discounted bills held by the People's Bank of China The interest rate used for discounting; the deposit reserve interest rate refers to the interest rate paid by the People's Bank of China to the statutory deposit reserve deposited by financial institutions; the excess deposit reserve interest rate refers to the reserve deposited by the central bank to financial institutions that exceeds the statutory deposit The interest rate on the partial payment of the reserve level.
2. Adjust the statutory deposit and loan interest rates of financial institutions.
3. Formulate the floating range of interest rates for deposits and loans of financial institutions.
4. Formulate relevant policies to adjust various interest rate structures and grades.
(1) Marketization. It is obvious that the benchmark interest rate must be determined by
Unit: Annual interest rate%
Adjust the time
Current deposit
Time deposit
Three months
Half a year
One year
Two years
Three years
Five years
1990.04.15
2.88
6.30
7.74
10.08
10.98
11.88
13.68
1990.08.21
2.16
4.32
6.48
8.64
9.36
10.08
11.52
1991.04.21
1.80
3.24
5.40
7.56
7.92
8.28
9.00
1993.05.15
2.16
4.86
7.20
9.18
9.90
10.80
12.06
1993.07.11
3.15
6.66
9.00
10.98
11.70
12.24
13.86
1996.05.01
2.97
4.86
7.20
9.18
9.90
10.80
12.06
1996.08.23
1.98
3.33
5.40
7.47
7.92
8.28
9.00
1997.10.23
1.71
2.88
4.14
5.67
5.94
6.21
6.66
1998.03.25
1.71
2.88
4.14
5.22
5.58
6.21
6.66
1998.07.01
1.44
2.79
3.96
4.77
4.86
4.95
5.22
1998.12.07
1.44
2.79
3.33
3.78
3.96
4.14
4.50
1999.06.10
0.99
1.98
2.16
2.25
2.43
2.70
2.88
2002.02.21
0.72
1.71
1.89
1.98
2.25
2.52
2.79
2004.10.29
0.72
1.71
2.07
2.25
2.70
3.24
3.60
2006.08.19
0.72
1.80
2.25
2.52
3.06
3.69
4.14
2007.03.18
0.72
1.98
2.43
2.79
3.33
3.96
4.41
2007.05.19
0.72
2.07
2.61
3.06
3.69
4.41
4.95
2007.07.21
0.81
2.34
2.88
3.33
3.96
4.68
5.22
2007.08.22
0.81
2.61
3.15
3.60
4.23
4.95
5.49
2007.09.15
0.81
2.88
3.42
3.87
4.50
5.22
5.76
2007.12.21
0.72
3.33
3.78
4.14
4.68
5.40
5.85
2008.10.09
0.72
3.15
3.51
3.87
4.41
5.13
5.58
2008.10.30
0.72
2.88
3.24
3.60
4.14
4.77
5.13
2008.11.27
0.36
1.98
2.25
2.52
3.06
3.60
3.87
2008.12.23
0.36
1.71
1.98
2.25
2.79
3.33
3.60
2010.10.20
0.36
1.91
2.20
2.50
3.25
3.85
4.20
2010.12.26
0.36
2.25
2.50
2.75
3.55
4.15
4.55
2011.02.09
0.40
2.60
2.80
3.00
3.90
4.50
5.00
2011.04.06
0.50
2.85
3.05
3.25
4.15
4.75
5.25
2011.07.07
0.50
3.10
3.30
3.50
4.40
5.00
5.50
2012.06.08
0.40
2.85
3.05
3.25
4.10
4.65
5.10
2012.07.06
0.35
2.60
2.80
3.00
3.75
4.25
4.75
2014.11.22
0.35
2.35
2.55
2.75
3.35
4.00
2015.03.01
0.35
2.10
2.30
2.50
3.10
3.75
2015.05.11
0.35
1.85
2.05
2.25
2.85
3.50
2015.06.28
0.35
1.60
1.80
2.00
2.60
3.25
2015.08.26
0.35
1.35
1.55
1.75
2.35
3.00
2015.10.24
0.35
1.10
1.30
1.50
2.10
2.75
Note: As of November 22, 2014, the People's Bank of China no longer announces the benchmark interest rate for Renminbi five-year time deposits of financial institutions.
News from the website of the People's Bank of China. With the approval of the State Council, the People's Bank of China has decided to comprehensively liberalize the control of loan interest rates for financial institutions from July 20, 2013.
1. The lower limit of 0.7 times the loan interest rate of financial institutions shall be abolished, and financial institutions shall independently determine the level of loan interest rates in accordance with commercial principles.
2. The regulation of the discount rate of bills will be abolished, and the method of determining the discount rate on the basis of the rediscount rate will be changed and determined by financial institutions.
3. There is no longer a cap on the loan interest rate of rural credit cooperatives.
4. In order to continue to strictly implement differentiated housing credit policies and promote the healthy development of the real estate market, the floating range of personal housing loan interest rates will not be adjusted for the time being.
The People's Bank of China said that after the liberalization of loan interest rate controls, the space for financial institutions to negotiate pricing with customers will be further expanded, which will help promote financial institutions to adopt differentiated pricing strategies and reduce corporate financing costs; it will also help financial institutions to continuously increase their independent pricing. Capabilities, transform business models, improve service levels, and increase financial support to businesses and residents; it is conducive to optimizing the allocation of financial resources, better playing the role of financial support for the real economy, and more powerfully supporting economic structural adjustment and transformation and upgrading.
On May 24, 2013, the State Council approved the Development and Reform Commission's Opinions on the Key Tasks for Deepening the Reform of the Economic System in 2013. The Opinions called for the steady advancement of the market-oriented reform of interest rates and exchange rates. Gradually expand the floating range of deposit and loan interest rates, and establish and improve the market benchmark interest rate system. Improve the RMB exchange rate formation mechanism and give full play to the fundamental role of market supply and demand in the formation of exchange rates. We will steadily advance the convertibility of RMB capital items, establish an overseas investment system for qualified domestic individual investors, and study and promote qualified overseas institutions to issue RMB bonds in China. This work is the responsibility of the People's Bank of China in conjunction with the Development and Reform Commission, the Ministry of Finance, the China Banking Regulatory Commission, the Securities Regulatory Commission, and the Foreign Exchange Bureau. Fully liberalizing the control of loan interest rates for financial institutions is a specific measure to implement the requirements of the Opinions. [2]

IN OTHER LANGUAGES

Was this article helpful? Thanks for the feedback Thanks for the feedback

How can we help? How can we help?

RELATED ARTICLES