China lowers its benchmark interest rate to 3.65%

China lowers its benchmark interest rate to 3.65%

The People’s Bank of China (PCB, the Chinese central bank) announced today that it will lower its reference rate for loans by five basis points, from 3.7% to 3.65%.

The reference rate for credits (LPR, acronym in English) to one year had registered its last variation last January, when the central bank cut it from 3.8%.

Likewise, the institution announced a reduction of 15 basic points, from 4.45% to 4.3%, for the five-year LPR, after experiencing a similar reduction in May.

These decisions meet the expectations of analysts and investors that the BPC would move in the face of data that show a slowdown in the recovery of the national economy.

A week ago, the institution had already announced reductions of 10 basis points in medium-term loan facilities (MLF) and reverse repurchase agreements (“repos”), important financing tools of the banking system.

The LPR is calculated from the price contributions of a series of banks -including small lenders that tend to have higher financing costs and greater exposure to non-performing loans-, and aims to lower borrowing costs and support the “real economy”.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.