China cut its benchmark lending rate as expected in a monthly decision on Monday, after cutting other policy rates last month as part of a series of stimulus measures aimed at economic recovery.
The one-year loan prime rate (LPR) was cut by 25 basis points from 3.35% to 3.10%, and the five-year LPR was cut by the same amount from 3.85% to 3.6%.
Lending rates were last lowered in July.
At a financial forum last week, People’s Bank of China Governor Ban Gongsheng said lending rates would be cut by 20-25 basis points on October 21.
On September 24, the People’s Bank of China announced that it would cut banks’ reserve requirements by 50 basis points and the benchmark 7-day reverse repo rate by 20 basis points, in an effort to provide support to the struggling real estate sector and financial institutions. launched the most aggressive stimulus package since the pandemic. Promote consumption.
Last month, the medium-term lending system interest rate was also lowered by 30 basis points.
While most new and outstanding loans in China are based on a one-year LPR, five-year interest rates influence mortgage pricing.
Since the September 24th action, the CSI300 index has broken records for daily movements, gaining more than 14% overall. During this period, the renminbi depreciated by 1% against the dollar.
But initial enthusiasm has given way to concerns about whether policy support is large enough to restore growth, leaving stocks volatile in recent trading.
Data on Friday showed China’s third-quarter economic growth was slightly better than expected, but real estate investment fell more than 10% in the first nine months of the year. Retail sales and industrial production recovered in September.
Officials at a press conference on Friday expressed confidence that the economy could meet the government’s full-year growth target of around 5%, and could further reduce bank reserve requirements by the end of the year. he warned.
Chris Weston, head of research at Australian online brokerage firm Pepperstone, said: “Market participants may be feeling policy easing fatigue, so it remains to be seen what impact further easing will have on China/Hong Kong stocks and CNH. Whether it should be given is up for debate.” Note.
