(Bloomberg) -- Chinese lenders lowered borrowing costs for a second straight month after the central bank cut policy loan rates and pledged more easing to stabilize the economy.
The one-year loan prime rate was cut by 10 basis points to 3.7% while the five-year rate was lowered by 5 basis points to 4.6%, the People’s Bank of China announced Thursday. The median forecast of economists polled by Bloomberg was a 10-basis point cut for both rates.
The LPRs, which are the de facto benchmark lending rates, are based on quotes that 18 banks offer their best customers and are submitted to the PBOC.
The one-year rate usually moves in lockstep with the one-year medium-term lending facility rate, which the PBOC cut by 10 basis points Monday, the first reduction in almost two years. The central bank followed a day later by pledging more action to bolster a slowing economy.
Any move in the five-year rate, a reference for long-term loans including mortgages, is seen as a signal of Beijing’s policy attitude toward the struggling property sector. It’s been lowered fewer times than the one-year tenor since a revamp of the rate in 2019.
The one-year LPR was lowered by 5 basis points in December, after the central bank reduced the amount of cash banks must hold in reserve to boost liquidity, driving funding costs down.
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