2024-07-24 05:59:04
The People’s Bank of China unexpectedly lowered the one-year lending rate (LPR) by 10 basis points to 3.35% per annum from 3.45%, Day.Az reports, citing Interfax.
The rate on five-year loans, which is a benchmark for the mortgage market, has been reduced to 3.85% from 3.95%.
Both rates are at record lows, and analysts surveyed by Trading Economics did not expect them to change.
In addition, the NBK has reduced the rate on seven-day repo operations for the first time in almost a year – to 1.7% from 1.8%. The decision to reduce rates was made with the aim of “increasing financial support for the economy,” the central bank reported.
The LPR became a benchmark in August 2019 after the PBOC carried out an interest rate reform. Since 2020, the PBOC requires banks to focus on the LPR when setting rates on new loans. The five-year rate directly affects the cost of mortgages, and the one-year rate affects all other loans.
Bloomberg reported earlier that the rate on seven-day repo operations could become key in the future for the PBOC, which would like to focus on shorter-term rates.
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