A man looks at his smartphone as he walks past the People’s Bank of China building on May 20, 2022 in Beijing.
Jiang Qiming | China News Service | Getty Images
China cut its key lending rates again on Monday, a week after cutting two interest rates in a surprise move.
The moves are seen as an attempt to revive demand for credit and ignite the economy hurt by prolonged Covid lockdowns and housing debt woes.
The People’s Bank of China cut its five-year lending rate by 15 basis points, from 4.45%, to 4.30%, and cut its one-year lending rate by 5 basis points up to 3.65%.
Most new loans in China are based on the one-year LPR.
Last week, China’s central bank cut the one-year Medium Term Lending Facility (MLF) lending rate to some financial institutions by 10 basis points. It also cut the seven-day reverse repo rate by 10 basis points to 2%.
Positive reactions to last week’s rate changes were short-lived, said analysts such as Navigate Commodities CEO Atilla Widnell.
“Further monetary easing/stimulus was seen as futile as ‘flogging a dead horse,’ given that China’s economy desperately needs consumers back on the streets to spend money,” he said in a note.
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