China cuts one-year interest rate – five-year rate surprisingly unchanged

by time news

2023-08-21 04:31:00

Bank of China

The monetary watchdogs have adjusted the one-year key interest rate.

(Photo: dpa)

Shanghai In view of the weak economy, the Chinese central bank has tightened its monetary policy. As expected, monetary authorities lowered the one-year interest rate on Monday, but surprisingly left the five-year interest rate unchanged.

The one-year lending rate (LPR) was cut 10 basis points to 3.45 percent from the previous 3.55 percent, while the five-year LPR was left at 4.20 percent. In a Reuters survey of 35 market observers, all participants had expected both interest rates to be reduced.

Most loans are based on the one-year LPR. The interest rate on five-year loans affects mortgages. Most recently, China lowered both LPRs in June to boost the economy – so far without any significant effect. The real estate crisis and falling foreign demand are burdening the economy.

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