In a strategic move to stimulate the economy, China has reduced its benchmark lending rates once again. The one-year Loan Prime Rate (LPR) has been cut to 3.1% from the previous 3.35%, while the over-five-year LPR has decreased to 3.6% from 3.85%, as reported by the National Interbank Funding Center.
This marks the third LPR reduction this year, highlighting the country's commitment to lowering financing costs and supporting both consumer demand and investment growth. Analyst Wu Bin from China Minsheng Bank noted that the cuts surpassed market expectations, emphasizing the government's dedication to economic recovery through proactive monetary policies.
Recent measures include lowering the seven-day reverse repos rate by 20 basis points and reducing the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points. These actions have prompted major commercial banks to align by lowering deposit rates, further easing financial burdens.
Looking ahead, Central Bank Governor Pan Gongsheng indicated the possibility of additional RRR cuts between 0.25 to 0.5 percentage points in 2024, contingent on liquidity conditions. Such steps are part of a broader strategy to stabilize capital and property markets while enhancing financial openness.
Experts like Wang Qing, Chief Economist at Golden Credit Rating, believe these measures will strengthen economic momentum and help achieve growth targets for the year. Additionally, the central bank's initiative to lower mortgage rates is set to save borrowers approximately 150 billion yuan, benefiting around 50 million households.
Reference(s):
cgtn.com
