SHANGHAI (Reuters) – China surprised markets on Monday by cutting a key short-term policy rate and its benchmark lending rates in a bid to boost economic growth.
The People’s Bank of China (PBOC) said it would cut the seven-day repo rate to 1.7 percent from 1.8 percent.
Beijing also announced a reduction in its benchmark lending rates by the same margin. The one-year lending prime rate (LPR) was lowered to 3.35% from 3.45% previously, while the five-year rate was reduced to 3.85% from 3.95%.
The rate cut is aimed at “strengthening countercyclical adjustments to better support the real economy,” the PBOC said in a statement.
The cuts come as China released weaker-than-expected second-quarter economic data last week and days after the end of the Chinese Communist Party’s (CCP) plenum.
The country, on the brink of deflation, is facing a prolonged housing crisis, rising debt and weak consumer and business morale.
(Written by the Shanghai and Beijing offices, Blandine Hénault for the )
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