China cuts lending benchmarks to support economy
The nation cut its lending benchmarks on Tuesday in the first such easing in 10 months, as authorities seek to shore up a slowing recovery in the world's second-largest economy, with more stimulus expected. The latest monetary easing comes as China's post-pandemic recovery shows signs of losing steam after some initial momentum in the first quarter of this year. The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.55 percent, while the five-year LPR was cut by the same margin to 4.20 percent from 4.30 percent. A poll of 32 market participants conducted by Reuters news agency showed all respondents expected reductions to both rates. The People's Bank of China (PBOC) lowered short- and medium-term policy rates last week, signalling it is about to embark on another round of loosening in monetary settings in a push to rev up the recovery. The medium-term lending facility rate serves as a guide to the LPR and markets mostly see the medium-term rate as a precursor to any changes to the lending benchmarks. "These cuts will lower the cost of new loans, as well as interest payments on existing loans," said Julian Evans-Pritchard, head of China economics at Capital Economics. "That should offer some modest support to economic activity. But we think it is unlikely to drive a sharp acceleration in credit growth, given weak credit demand." On Friday, the cabinet met to discuss measures to spur growth in the economy and pledged more policy support. (Reuters)