China’s central bank has cut one of its benchmark lending rates for the first time since April 2020, during the height of the global pandemic.
The People’s Bank of China lowered the one-year loan prime rate to 3.80%, dropping it from 3.85% previously. The five-year loan prime rate remained unchanged at 4.65%.
The last time China’s central bank cut the one-year and five-year lending rates was in April 2020. The one-year loan prime rate affects lending rates for corporate and household loans.
Last week, the central bank’s cut to the amount of cash banks must have in reserve took effect, marking the second such move this year.
China was the first major economy to shake off the pandemic’s shock. But this year, especially since July, growth has been dragged down by muted consumer spending, Beijing’s zero-tolerance policy for controlling subsequent outbreaks and tighter regulations, particularly on the real estate sector.
At the Chinese government’s annual Central Economic Work Conference earlier this month, the country’s top leaders emphasized that stability would be a greater focus in the year ahead.
The meeting concluded that “prudent monetary policies should be flexible and appropriate, and liquidity should be maintained at a reasonable and ample level,” according to state media reports.
Last week, the Bank of England became the first major central bank to raise interest rates to counter rising inflation.
