Chinese rate cuts:China cut benchmark interest rates as anticipated in Monday’s monthly setting, following cuts to other policy rates last month as part of a stimulus package to revive the economy.
The one-year lending prime rate (LPR) CNYLPR1Y=CFXS was reduced by 25 basis points to 3.10 from 3.35 percent, while the five-year LPR CNYLPR5Y=CFXS was reduced by the same margin to 3. 6 percent from 3.85 percent previously. .
Interest rates were last cut in July.
People’s Bank of China (PBOC) Governor Pan Gongsheng said at a financial forum last week that interest rates will decrease by 20 to 25 basis points on October 21.
The People’s Bank of China announced cuts to banks’ reserve requirement ratio by 50 basis points and the benchmark seven-day reverse repo rate by 20 basis points on September 24, kicking off stimulus proposals that include measures to support the weakened real estate sector and boost consumption.
It also cut the rate on the medium-term credit facility by 30 basis points last month.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences mortgage pricing.
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