SHANGHAI (Reuters) – China cut its prime lending rate on Monday, adding monetary easing to those taken last week, as it seeks to boost demand for credit in the face of a crisis-induced economic slowdown real estate and the resurgence of the COVID-19 epidemic.
The People’s Bank of China (PBOC) set the one-year lending prime rate (TPP) at 3.65%, down from 3.70% previously. This is the first decline in the TPP over one year since last January.
The central bank also cut 15 basis points from the five-year TPP, now at 4.30%.
A Reuters survey last week indicated that most analysts polled were expecting a 10 basis point decline in the TPP year on year, with all expecting a reduction in the TPP over five years.
These rate cuts “are in line with our expectations”, commented Marco Sun, chief market analyst at MUFG Bank.
“The intentions of this policy are quite obvious … as the 15 basis point cut in the five-year TPP is intended to strengthen demand for long-term financing,” he said.
Earlier this month, the PBC surprised by lowering two of its key interest rates, including its medium-term lending facility, after the publication of indicators showing a slowdown in economic activity in July.
The challenge of reviving the economy is a delicate one for the PBC, as too much stimulus could add to inflationary pressures, while other central banks, such as the US Federal Reserve, tighten their policies. monetary.
(Report Winni Zhou and Brenda Goh; French version Jean Terzian)
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