PBoC delivers smaller rate cut than expected

Move signals banks are under strain due to falling interest margins, analysts say

PBoC

China’s central bank cut its one-year benchmark lending rate today but left its five-year rate unchanged, surprising many market analysts who expected more generous easing to support the faltering economy.

The People’s Bank of China cut the one-year loan prime rate (LPR) by 10 basis points from to 3.45% from 3.55%, while holding the five-year LPR at 4.2%.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate is a reference for mortgages.

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