China Cuts Loan Prime Rates For First Time In 7 Months

(RTTNews) - The People's Bank of China reduced its benchmark interest rate for the first time in seven months to stimulate consumption and support the property market amid soothing trade tensions.

The central bank lowered its one-year loan prime rate by 10 basis points to 3.0 percent from 3.10 percent.

Likewise, the five-year LPR, the benchmark for mortgage rates, was reduced to 3.50 percent from 3.60 percent.

The bank had cut its both LPRs by 25 basis points each in October 2024.

The PBoC fixes the LPR monthly based on the submission of 18 designated banks. However, Beijing has influence over the fixing. The LPR replaced the traditional benchmark lending rate in August 2019.

Earlier this month, the central bank had reduced its 7-day reverse repo rate by 10 basis points and reserve requirement ratio by 0.5 percentage point and also unveiled a slew of measures to support the economy hit by trade tariffs.

Official data released on Monday revealed a mixed picture about the economy. Industrial production and retail sales grew at slower rates in April. Nonetheless, 6.1 percent growth in industrial output exceeded expectations. Retail sales growth eased to 5.1 percent from 5.9 percent in March.