China cuts benchmark lending rates more than expected

Beijing: China’s central bank has cut its benchmark lending rate to boost economic growth. Bank of China has announced a rate cut for the first time since June. The People’s Bank of China cut the five-year loan prime rate to 3.95% from 4.2%, while the one-year loan prime rate, which serves as a benchmark for corporate loans, was kept unchanged at 3.45% Was.

The five-year lending prime rate was last cut in June while the one-year lending rate was last cut in August. Both rates are now at historic lows.

According to the news agency, the loan prime rate was introduced in 2019 and this is the biggest cut since then. According to experts, this decline is much more than expected. China’s decision contrasts with other major countries that have cut rates to fight inflation.

Specifically, last month, Beijing announced it would reduce the amount of reserves held by banks, known as the reserve requirement ratio.

China’s economy is facing many headwinds and the government has been struggling for months to boost sluggish growth. The Asian country has long been grappling with a property-sector crisis, youth unemployment and a global recession.

China’s central bank’s move to cut lending rates is aimed at encouraging commercial banks to offer more loans and grants at more favorable rates. This is in sharp contrast to most other major economies, which have been raising rates to curb inflation.

In January, consumer prices fell at the fastest rate in more than 14 years, increasing pressure on the government to take more aggressive steps to revive the country’s battered economy.

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