Source: The People’s Bank of China
China’s central bank has reduced the benchmark lending rate for the first time since April 2020, during the height of COVID-19 in the country. CSI 300 down -1.5%, CNY USD down -0.01%
- The People’s Bank of China reduced the one-year loan prime rate to 3.8% from 3.85%. The five-year loan prime rate was retained at the prior month’s level at 4.65%.
- The loan prime rate impacts lending rates for corporate and household loans. Last week, PBOC cut to the number of cash banks need to maintain on reserve, a second similar move by the bank this year.
- China was the first leading economy to reduce the impact of the pandemic shock.
- Meanwhile, growth in 2021 has been slowed down by muted consumer spending, China’s zero-tolerance policy for controlling regular outbreaks, and tighter regulations.