Investing.com– The People’s Bank of China cut its benchmark loan prime rate by slightly more than expected on Monday, with the cut coming amid a flurry of measures from Beijing to shore up economic growth.
The PBOC cut its one-year LPR to 3.10% from 3.35%, slightly more than expectations it would cut the rate to 3.15%.
The five-year LPR, which determines mortgage rates, was cut to 3.60% from 3.85%, against expectations for a cut to 3.65%. The PBOC had last cut rates in July.
The LPR is determined by the PBOC based on considerations from 18 designated commercial banks, and is used as a benchmark for lending rates in the country.
The rate cut was largely telegraphed by Chinese authorities, and is the latest in a line of sweeping stimulus measures aimed at shoring up economic growth.
Beijing had over the past month flagged several monetary and fiscal measures aimed at supporting infrastructure development, stemming a property market decline and keeping economic growth on track to meet the government’s 5% annual target. The government had promised interest rate cuts as part of these measures, making Monday’s cut somewhat expected.
The past month saw Beijing unveil its most targeted measures yet at supporting growth. But the measures inspired middling investor confidence, given that Beijing did not provide details on the implementation, timing and scale of the planned measures.
The PBOC has also consistently cut the LPR over the past two years, to limited effect. Looser monetary conditions have so far done little to offset a persistent deflationary trend in the country, with recent readings for September showing little improvement.