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Insignia Consultants | China cuts key rates to aid economy as trade war simmers

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China cuts key rates to aid economy as trade war simmers

By: Admin
2 weeks ago
9427

BEIJING, May 20 (Reuters) - China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered borrowing costs as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war.

The widely expected rate cuts are aimed at stimulating consumption and loan growth in a weakening economy while still protecting commercial lenders' shrinking profit margins.

The People's Bank of China said the one-year loan prime rate (LPR), a benchmark determined by banks, had been lowered by 10 basis points to 3.0% , while the five-year LPR was reduced by the same margin to 3.5%.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.

The lending rate cut was announced just after five of China's biggest state-owned banks said they have trimmed their deposit interest rates.

Industrial and Commercial Bank of China (601398.SS), opens new tab, Agricultural Bank of China (601288.SS), opens new tab, China Construction Bank (601939.SS), opens new tab and Bank of China (601988.SS), opens new tab reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps.

https://www.reuters.com/business/finance/china-construction-bank-cuts-deposit-rates-2025-05-20/