A night view of the Central Business District in Beijing, China, Nov 10, 2021.
Future Publishing | Future Publishing | Getty Images
China’s central bank cut its one-year loan prime rate Monday, while leaving its five-year rate unchanged. The decisions are weaker than expectations for more muscular policy intervention following a raft of data that pointed to faltering growth momentum in the world’s second-largest economy.
The People’s Bank of China trimmed its one-year loan prime rate — the peg for most household and corporate loans in China — by 10 basis points from 3.55% to 3.45%, just shy of the consensus expectation for a 15 basis point cut in a Reuters poll. This was the second time China has cut this rate in three months.
The PBOC left its five-year loan prime rate — the peg for most mortgages — unchanged at 4.2%, while economists expected a 15 basis point cut.
Monday’s actions follow surprise cuts to its short- and medium-term lending rates last Tuesday after a raft of economic data pointed to weak credit growth and emerging deflation risks, intensifying fears of a rapidly slowing economy.
Default risks in real estate and missed payments on some shadow banking-linked trust products are further spooking investors and policymakers.
The PBOC had lowered the rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility loans to some financial institutions by 15 basis points to 2.50% from 2.65% previously. Overnight, seven-day, and one-month standing lending facility rates were each trimmed by 10 basis points to 2.65%, 2.8% and 3.15%, respectively.
This is breaking news. Please check back for updates.