China cuts benchmark lending rate to prop-up virus-hit economy
SHANGHAI/TOKYO - China cut the benchmark lending rate on Thursday, as widely expected, as the authorities move to lower financing costs for businesses and support an economy jolted by a severe coronavirus outbreak.
The one-year loan prime rate CNYLPR1Y=CFXS, the new benchmark lending gauge introduced in August, was lowered by 10 basis points to 4.05% from 4.15% at the previous monthly fixing.All 51 respondents in a Reuters snap survey had expected a reduction in the LPR, with 38 respondents, or about 75% of participants, tipping a 10 basis points cut to both tenors.
“The Chinese authorities are sending a message that easing will happen, but it will happen at a measured pace. They do not want fuel expectations that they will be easing aggressively,” Mishra said. Banks are already setting lending rates well below the benchmark and if government subsidies are taken into account, some borrowers may not pay any interest at all, sources told Reuters.
The world’s second-biggest economy, already grappling with growth at its weakest in almost three decades as a trade war with the United States took its tool, had shown some signs of stabilization just before the epidemic hit.
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