China cut its lending benchmark loan prime rate (LPR) for the first time in 20 months on Monday.
The one-year LPR was lowered by 5 basis points to 3.80% from 3.85% previously, while the five-year LPR remained at 4.65%.
Most new and outstanding loans in China are based on the one-year LPR while the five-year rate influences the pricing of home mortgages.
Some analysts said the central bank’s two reserve requirement ratio (RRR) cuts this year have allowed institutions to lower their costs of lending, with the two cuts saving banks up to 28 billion yuan ($4.39 billion), according to Goldman Sachs’ estimates. read more