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Business News/ Economy / China's central bank cuts benchmark lending rate for the first time since June
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China's central bank cuts benchmark lending rate for the first time since June

The People’s Bank of China cut the five-year loan prime rate (LPR) to 3.95% from 4.2%, while the one-year LPR, which serves as a benchmark for corporate loans, was kept unchanged at 3.45%.

The five-year LPR was last cut in June, while the one-year rate was last lowered in August. Both rates are now at historic lows. (Photo: Bloomberg News)Premium
The five-year LPR was last cut in June, while the one-year rate was last lowered in August. Both rates are now at historic lows. (Photo: Bloomberg News)

China’s central bank on Tuesday cut a key benchmark lending rate used to price mortgages in a move to boost economic growth.

The People’s Bank of China cut the five-year loan prime rate (LPR) to 3.95% from 4.2%, while the one-year LPR, which serves as a benchmark for corporate loans, was kept unchanged at 3.45%.

The five-year LPR was last cut in June, while the one-year rate was last lowered in August. Both rates are now at historic lows.

Last month, Beijing had announced it would cut the amount banks must hold in reserve, known as the reserve requirement ratio (RRR).

China’s economy has been battling a range of headwinds and officials have struggled for months to kickstart the economic growth. The Asian country has been facing prolonged property-sector crises, soaring youth unemployment and a global slowdown that has hammered demand for Chinese goods. 

China’s central bank’s move to cut the lending rate is aimed at encouraging commercial banks to grant more credit and at more advantageous rates. This comes in stark contrast to most other major economies, which are raising rates to curb inflation, AFP reported.

In January, consumer prices fell at their quickest rate in more than 14 years, raising pressure on the government for more aggressive moves to revive the country’s battered economy.

(With inputs from Agencies)

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Published: 20 Feb 2024, 07:18 AM IST
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