Economy

China cuts benchmark lending rate to prop up coronavirus-hit economy

Updated : February 20, 2020 07:51 AM IST

The one-year loan prime rate (LPR) was lowered by 10 basis points to 4.05 percent from 4.15 percent at the previous monthly fixing.

The five-year LPR was lowered by 5 basis points to 4.75 percent from 4.80 percent.

China cut the benchmark lending rate on Thursday, as widely expected, as the authorities move to lower financing costs for businesses and support an economy hit by a fast-spreading coronavirus epidemic.

The one-year loan prime rate (LPR) was lowered by 10 basis points to 4.05 percent from 4.15 percent at the previous monthly fixing.

The five-year LPR was lowered by 5 basis points to 4.75 percent from 4.80 percent.

All 51 respondents in a Reuters snap survey had expected a reduction in the LPR, with 38 respondents, or about 75 percent of participants, tipping a 10 basis points cut to both tenors.

The LPR cut followed a similar move in the central bank’s medium-term lending rate on Monday as policymakers sought to ease the drag to businesses from the coronavirus outbreak.

The LPR is a lending reference rate set monthly by 18 banks. The People’s Bank of China revamped the mechanism to price LPR in August 2019, loosely pegging it to the medium-term lending facility rate.

China cuts benchmark lending rate to prop up coronavirus-hit economy

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