China today reduced two key benchmark lending rates. The National Interbank Funding Centre affiliated to the country’s central bank announced that the one-year loan prime rate (LPR), which serves as a benchmark for corporate loans, is now 3.55 per cent, down from the earlier 3.65 per cent. The over-five-year LPR, used to price mortgages, was lowered by 10 basis points to 4.2 per cent.

The People's Bank of China (PBOC) cut the interest rate of its one-year medium-term lending facility (MLF) from 2.75 per cent to 2.65 per cent last week to strengthen counter-cyclical adjustment and stabilise market expectations, a state-controlled news agency reported.

The central bank also lowered the seven-day reverse repo rate for the first time last week since last August from 2 per cent to 1.9 per cent and announced a cut on the interest rates of its standing lending facility, with the overnight rate down by 10 basis points to 2.75 per cent.

The policy rate cuts led to this month's LPR cut, which will effectively drive down real loan interest rates, reduce financing costs, stimulate credit demand, and strengthen the growth momentum of consumption and investment, commented Zeng Gang, director of the Shanghai Institution for Finance and Development.

Fibre2Fashion News Desk (DS)

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People's Bank of China cuts 2 key benchmark interest rates

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