China cuts mortgage rate to prop up economy. Is bigger policy loosening close?
- China’s one-year loan prime rate (LPR) was cut from 3.65 per cent to 3.55 per cent, while the five-year LPR was also cut from 4.3 per cent to 4.2 per cent
- China’s central bank also cut three policy interest rates last week amid efforts to support the slowing economy following a string of disappointing data
China cut two benchmark lending rates on Tuesday, in the latest sign that Beijing’s policymakers are aiming to lower the financial burden on households and also help stabilise the cooling property sector.
The latest moves by the central bank have fuelled further hope of broader economic stimulus to shore up China’s headline growth, and stabilise market confidence, after major international investment banks slashed their 2023 gross domestic product forecasts from last week.
The five-year loan prime rate (LPR) – which is a reference rate for mortgages – was cut from 4.3 to 4.2 per cent at the June fixing, the People’s Bank of China said.
The one-year loan prime rate – the medium-term lending benchmark for corporate loans – was also cut from 3.65 to 3.55 per cent.
While the cuts won’t make much difference on their own, they are set to be followed by wider policy easing