Analyst: LPR still has room for decline next year

Since the beginning of this year, the LPR has only been adjusted once (in May). As of now, the LPR has remained unchanged for seven consecutive months. "Focusing on stabilizing economic operations in the first quarter of 2026, monetary policy is expected to end the observation period and enter a phase of exertion," said Wang Qing, chief macro analyst at Dongfang Jincheng. He predicts that the People's Bank of China may implement a new round of interest rate cuts and reserve requirement ratio reductions in the first quarter of 2026, with the possibility of this occurring before the Spring Festival, which will drive the LPR for both terms to follow suit with a downward adjustment. Dong Ximiao, chief researcher at Zhailian and deputy director of the Shanghai Financial and Development Laboratory, believes that if deposit rates and policy rates further decline in 2026, the LPR is expected to stabilize with a downward trend, while placing greater emphasis on the role of structural monetary policy tools. Overall, there is still room for implementing reserve requirement ratio reductions and interest rate cuts in 2026, but the probability of reserve requirement ratio reductions is greater than that of interest rate cuts. (Securities Daily)