China cuts benchmark lending rates for first time in 7 months

China cut its key lending rates by 10 basis points on May 20, as a stronger yuan and easing trade tensions offer it room for monetary easing aimed at boosting its economy, Report informs via CNBC.

The People’s Bank of China trimmed the 1-year loan prime rate to 3.0% from 3.1%, and the 5-year LPR to 3.5% from 3.6%.

This marked the first reduction in rates since the central bank’s 25-basis-point cut in October, as Beijing intensifies efforts to shore up its economy.

The benchmark lending rates — normally charged to banks’ best clients — are calculated monthly based on designated commercial banks’ proposed rates submitted to the PBOC.

The 1-year LPR influences corporate and most household loans in China, while the 5-year LPR serves as a benchmark for mortgage rates.