China’s central bank announced a cut to its benchmark lending rates again on Thursday amid increasing concern about an economic slump in the world’s second-largest economy.
- The People’s Bank of China lowered the one-year loan prime rate by ten basis points to 3.7% from 3.8%. In December, the PBOC cut the on-year loan primate rate for the first time since the pandemic started.
- The five-year loan prime rate was cut by 5 basis points to 4.6% from 4.65%. Loan primate rates (LPR) impact the lending rates for corporate and household loans in the economy.
- A larger percentage of new and outstanding loans in China are based on one-year LPR, but the five-year rate affects the pricing of home mortgages.
- Sheana Yue, the China economist at Capital Economics, stated that mortgages would be slightly cheaper that could help shore up housing demand.
Yue further stated that targeted support for property buyers appears to be cushioning one of the more severe downside risks facing the US economy.
CSI 300 Index up +0.90%, CNY USD down -0.01%Source: CNBC