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On Thursday, China cut the market-based benchmark lending rate, in line with market expectations as authorities stepped up monetary support to shore up the economy. The one-year loan prime rate (LPR) came in at 3.7% Thursday, down from 3.8% a month earlier, according to the National Interbank Funding Center. The over-five-year LPR, on which many lenders base their mortgage rates, was lowered by 5 basis points to 4.6%. The reduction followed a cut in the one-year LPR in December, which will produce positive effects in expanding domestic demand, stabilizing external demands, and ensuring stable development of the property sector, commented Wen Bin, chief analyst at China Minsheng Bank. Data on Monday showed that China's economic growth saw a strong year-on-year rebound of 8.1% in 2021, but authorities also warned of the triple pressure of demand contraction, supply shocks, and weakening expectations amid an increasingly complicated external environment.
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