China cut its benchmark lending rates after lowering other interest rates last month as part of a stimulus package to revive the economy, according to Reuters.
The one-year loan prime rate (LPR) was cut 25 basis points to 3.10 per cent from 3.35 per cent, whereas the LPR fell by the same amount to 3.6 per cent from 3.85 per cent. People’s Bank of China (PBOC) Governor Pan Gongsheng told a financial forum last week that lending rates would drop by 20-25 basis points on Monday, 21 October.
On 24 September, the PBOC announced a 50-basis-point cut in banks’ reserve requirement ratio, launching the most aggressive economic stimulus since the pandemic. Measures include supporting the real estate sector and boosting consumption.
The bank also cut its medium-term lending rate by 30 basis points last month. The yuan depreciated 1 per cent against the dollar over the period.
However, stocks fluctuated in recent sessions, as concerns emerged over whether policy support would be strong enough to revive growth. Data released on Friday showed China’s economic growth in the third quarter was slightly better than expected, although property investment fell more than 10 per cent since the start of the year.
Officials stated on Friday that the economy would be able to meet its growth target of around 5 per cent, in line with the government’s goal. They also noted a decline in the bank reserve ratio by the end of the year.
