China reduced its benchmark lending rates as expected on Monday, continuing stimulus efforts to rejuvenate its slowing economy.
The one-year loan prime rate (LPR) was lowered by 25 basis points, dropping to 3.10% from 3.35%. Similarly, the five-year LPR, which affects mortgage rates, was cut by the same margin to 3.60% from 3.85%.
These cuts follow reductions to other policy rates in September, including the medium-term lending facility rate and banks' reserve requirement ratio.
Governor of the People’s Bank of China (PBOC), Pan Gongsheng, hinted at this rate cut during a financial forum last week, indicating that the one-year LPR would decrease by 20 to 25 basis points.
The LPR cuts are part of broader stimulus initiatives, including measures aimed at stabilising the struggling property sector and boosting consumer spending.
Most loans in China are linked to the one-year LPR, while the five-year rate is significant for mortgage pricing, making these reductions critical to economic recovery.
The PBOC had also lowered the benchmark seven-day reverse repo rate by 20 basis points in late September, marking the start of a series of measures designed to lift the economy.
Last week, China reported stronger-than-anticipated GDP growth of 4.6% year-on-year for the third quarter, while retail sales and industrial production also surpassed forecasts.