China cuts key lending rate to revive flagging economy

Posted on July 29, 2024   |  

The People's Bank of China (PBOC) has cut the policy interest rate on 7-day reverse repos from 1.8% to 1.7% to boost economic support.

The PBOC also reduced the one-year loan prime rate from 3.45% to 3.35%, marking the first reduction since last August.

This change follows the PBOC's decision to keep the one-year medium-term lending facility rate at 2.5% last week.

The medium-term lending rate usually indicates potential changes in loan prime rates.

This year, Beijing's growth target of "5%" is challenged by weak domestic demand and property issues.

The GDP growth rate for the second quarter was 4.7% year-on-year, falling short of forecasts.

To address property problems, China has introduced a $41 billion plan for unsold homes, offered incentives for new appliances, and started issuing special long-term treasury bonds for major projects.