China cuts benchmark loan prime rates by 25 bps

Chinese rate cuts: China cut benchmark lending rates as anticipated at the monthly fixing on Monday, following reductions to other policy rates last month as part of a package of stimulus measures to revive the economy.

The one-year loan prime rate (LPR) CNYLPR1Y=CFXS was lowered by 25 basis points to 3.10 from 3.35 per cent, while the five-year LPR CNYLPR5Y=CFXS was cut by the same margin to 3.6 per cent from 3.85 per cent previously.

The lending rates were last cut in July.

People's Bank of China (PBOC) Governor Pan Gongsheng told a financial forum last week lending rates will decrease by 20 to 25 basis points on Oct. 21.

The PBOC announced cuts to banks' reserve requirement ratio by 50 basis points and the benchmark seven-day reverse repo rate by 20 basis points on Sept. 24, kicking off stimulus proposals that include measures to support the ailing property sector and boost consumption.

It also cut the medium-term lending facility rate by 30 basis points last month.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.