Empowering your trades with reliability!

China Cuts Lending Rates to Boost Demand

China’s central bank has lowered its benchmark lending rates for the first time this year in a bid to reignite domestic demand. On Tuesday, the People’s Bank of China reduced the one-year loan prime rate by 10 basis points to 3.0%, while the five-year rate was trimmed to 3.5%. The move followed coordinated bidding by major Chinese banks and comes after a prior 10-basis-point cut to the seven-day reverse repo rate earlier this month.

The policy adjustment is part of a broader effort by Beijing to support the economy amid sluggish growth and weak consumer confidence. Authorities have rolled out a string of monetary-easing tools in recent months, including liquidity injections and reductions to other key lending facilities. These latest rate cuts add to those efforts, underscoring policymakers’ urgency to stabilize the economic outlook.

In a further sign of easing, China’s four largest state-owned lenders also announced they would reduce deposit rates by as much as 25 basis points. The move is expected to lower borrowing costs across the financial system, freeing up more capital for investment and spending.

The rate cuts come just days after China and the United States surprised markets by reaching a preliminary trade agreement. Analysts said the timing reflects Beijing’s intention to backstop its economy with policy support while simultaneously pursuing external stability through diplomacy.

Markets are now watching for follow-through in the form of stronger consumer activity and improved business sentiment, with economists saying further stimulus may be deployed if recovery remains uneven.

Share this article
Don’t Miss The Market
Trade on Your Fingertip

WeChat: FPG_01

Please add the WeChat FPG_01, or scan the QR code.