SHANGHAI, May 20 (Reuters) – China unexpectedly cut its benchmark mortgage rate on Friday, its second cut this year, as Beijing seeks to revive the housing sector.
Officials have pledged to take further action to combat the slowdown in the world’s second-largest economy, hit by coronavirus outbreaks that have prompted restrictive measures that have weighed heavily on activity.
“The reduction in the five-year prime lending rate (TPP) should help revive home sales, which have gone from bad to worse recently,” Julian Evans-Pritchard of Capital Economics said in a note.
“But the lack of a one-year TPP cut suggests that the People’s Bank of China (PBOC) is trying to maintain targeted easing and that we shouldn’t expect large-scale stimulus of the kind we have. seen in 2020.”
China cut the five-year TPP by 15 basis points to 4.45%, the biggest cut since China revamped the interest rate mechanism in 2019. The one-year TPP remained unchanged at 3 .70%.
(Report Winni Zhou, Andrew Galbraith, and Kevin Yao; French version Camille Raynaud)