The People's Bank of China cut the one-year loan prime rate from 4.15% to 4.05%, and the five-year rate from 4.80% to 4.75%.
is the interest rate that banks charge their most creditworthy clients. The PBOC, in a revamp to China's interest rates regime last year, pushed commercial lenders to reference the loan prime rate when pricing their new loans.
The cut to the one-year and five-year loan prime rates followed the central bank's move on Monday to lower the interest rate on its one-year — funds that PBOC lends to financial institutions — from 3.25% to 3.15%. The loan prime rate is linked to interest rate on the medium-term lending facility.as authorities race to contain the spread of a new coronavirus — now called COVID-19 — which is believed to have originated in Wuhan, the capital of Hubei province.
"But even if the ... cut is passed on to all borrowers, that would only decrease average one-year bank lending rates from 5.44% to 5.34%. The ability of firms to postpone loan repayments and access loans on preferential terms will matter more in the near-term," he added. Bo Zhuang, chief China economist at research firm TS Lombard, said the Chinese economy would need more "aggressive" easing.after the PBOC announcement that both the medium-term lending facility rate and the loan prime rates could move even lower later this year.Related Tags
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