China on Monday cut its market-based benchmark lending rates.
The one-year loan prime rate (LPR) came in at 3.35 percent, down from 3.45 percent; while the over-five-year LPR, on which many lenders base their mortgage rates, went down by 10 basis points to 3.85 percent.
The monthly-released data serves as a pricing reference rate for banks and is based on rates of the People’s Bank of China’s open market operations.
The reduction in LPRs will help further reduce financing costs for the real economy, encourage investment and consumption, expand effective demand and help keep the economy running within a reasonable range, said Wen Bin, chief economist at China Minsheng Bank, reported China Media Group.
Wen added the lowering of LPRs will further decrease mortgage loan costs and will also play a positive role in further consolidating the recovery of the real estate market.
Commenting on the LPR reductions, Bruce Pang, the head of research and chief economist at JLL Greater China, said at present, the foundation for economic recovery in China still needs to be consolidated.
Pang said reforms in the loan market interest rate and adjustment of the market-oriented mechanism of deposit interest rate remain the focus of economic work. He said it is necessary from a policy perspective to achieve a stable and steady decline in corporate financing and household credit costs.
(With inputs from Xinhua; Cover via CFP)
