Benchmark lending rates have been cut in China as the country continues with efforts to stimulate growth across the world’s struggling second-largest economy.
One and five-year loan prime rates were lowered by 25 basis points respectively on Monday by the People’s Bank of China, following a reduction in July.
This took the one-year rate, which acts as a reference for consumer and business loans, from 3.35% to 3.10%.
The mortgage-determining five-year rate fell by 3.85% to 3.6% in the meantime, with the bank’s governor, Pan Gongsheng, having signalled the cuts last week.
These cuts follow measures announced in September by the People’s Bank of China to reduce banks’ reserve requirement ratios and the benchmark seven-day reverse repo rate, reflecting China’s most aggressive stimulus since the pandemic.
“Sure, the rate cut wasn’t a shocker, but the market is banking on the idea that the combined impact of all these recent measures could at least stem the economic bleeding,” SPI Asset Management partner Stephen Innes commented.
Asian markets were mixed on Monday following the latest cuts, with the Shenzhen composite index gaining 1.1% and CSI 300 climbing by 0.3%.