SHANGHAI (Reuters) – China cut its benchmark lending rates on Monday, adding to easing measures announced last week, as Beijing steps up efforts to spur credit demand in an economy hobbled by a property crisis and a resurgence of COVID infections.
The one-year loan prime rate (LPR) was lowered by 5 basis points to 3.65% at the central bank’s monthly fixing, while the five-year LPR was slashed by a bigger margin of 15 basis points to 4.30%.
In a Reuters poll conducted last week, 25 out of 30 respondents predicted a 10-basis-point reduction to the one-year LPR. All of those in the poll also projected a cut to the five-year tenor, including 90% of them forecasting a reduction larger than 10 bps.
Most new and outstanding loans in China are based on the one-year LPR, which is now loosely pegged to the central bank’s medium-term lending facility (MLF) rate, while the five-year rate influences the pricing of mortgages.
(Reporting by Winni Zhou and Brenda Goh; Editing by Shri Navaratnam)