The Chinese central bank on Thursday lowered a reference rate for medium-term loans, a measure anticipated by the markets and intended to support struggling growth in the second world economy.
The interest rate for its one-year loans to financial institutions (MLF) is reduced to 2.65% against 2.75% previously, the central bank said.
The trend of the MLF generally directs that of the reference borrowing rate for households, businesses and mortgage loans (LPR), closely followed by the markets and whose adjustment is decided on the 20th of each month.
The measure should make it possible to reduce the financing costs of commercial banks to encourage them to grant more credit under more favorable conditions and thus support the economy.
The last reduction in this rate dates back to August 2022.
The measure should make it possible to inject 237 billion yuan (30.6 billion euros) into the economy, the issuing institute said in a press release.
The announcement comes ahead of the release later in the morning of key economic indicators for May.
To the surprise of analysts, the central bank had already reduced on Tuesday the main rate for short-term (seven-day) cash loans to commercial banks.
The hoped-for post-Covid recovery after the lifting of health restrictions at the end of 2022 has tended to run out of steam in recent weeks, while it is barely materializing in certain sectors.
China has thus revealed disappointing economic indicators in recent days.
Inflation in the country was also almost zero in May, while ex-factory prices experienced their sharpest decline since 2016, signs of sluggish demand and a complicated environment for businesses.
Asian glove exports, historically a growth driver for the country, for their part contracted last month by 7.5% over one year.
To stimulate activity by discouraging savings, China’s major state-owned banks also lowered rates on a range of deposit products last week.
The Chinese government is aiming for around 5% growth this year, a rate that would be one of the weakest in decades for the Asian giant.