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A night view of the Central Business District in Beijing, China, November 10, 2021.
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China’s central bank cut its one-year prime lending rate on Monday, the second time in three months it has done so, underscoring the urgency of boosting growth in the world’s second-largest economy.
The People’s Bank of China cut its one-year prime lending rate in 10 basis points from 3.55% to 3.45%, but left its five-year lending prime rate unchanged at 4.2%. The last time the central bank cut these rates was in June and August 2022.
Most household and corporate loans in China are based on the PBOC’s one-year prime lending rate, while mortgages are linked to the five-year rate.
Stocks on Monday follow surprise cuts to its short- and medium-term lending rates last Tuesday after a series of economic data signaled weak credit growth and emerging deflation risks, intensifying fears of a slowing economy. quickly.
Default risks in the real estate sector and missed payments on some trust products linked to shadow banking are further spooking investors and policy makers.
The PBOC had cut the rate on 401 billion yuan ($55.25 billion) of one-year medium-term loans to some financial institutions by 15 basis points to 2.50% from 2.65% previously. Rates on the one-day, seven-day and one-month standing credit facilities were each lowered by 10 basis points to 2.65%, 2.8% and 3.15%, respectively.
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