China cuts benchmark lending rate to prop up economy

February 21, 2020 09:03
China’s central bank has taken another step to shore up the economy in the wake of the coronavirus crisis. Photo: Bloomberg

China cut the benchmark lending rate on Thursday, as widely expected, in a bid to lower financing costs for businesses and support the economy amid the coronavirus crisis.

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, Reuters reports.

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

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.

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