The one-year prime lending rate was reduced from 3.35% to 3.10%, while the five-year LPR was reduced from 3.85% to 3.60%.
The cuts to the LPR, which is set by a group of large Chinese banks, come after the People’s Bank of China in late September outlined measures to encourage households and businesses to borrow money. The measures include reducing interest rates and unlocking liquidity to encourage bank lending.
Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the price of mortgages and other long-term loans.
China’s biggest state-owned lenders cut their deposit rates last week, a step to offset the effects of lower lending rates on their increasingly tight profit margins.
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