China's central bank cuts lending rate to boost economy

Posted on February 26, 2024   |  

China's central bank has lowered a key benchmark lending rate to support its slowing economy and counteract rate increases in other major countries.

The five-year loan prime rate (LPR) has been reduced from 4.2% to 3.95% by the People's Bank of China.

However, the one-year LPR, used for corporate loans, remains unchanged at 3.45%.

These rates, closely watched by markets, are currently at historic lows and aim to encourage banks to offer more credit at favorable rates.

China's housing mortgage loans amounted to 38.2 trillion yuan or US$5.3 trillion by December's end, with the country implementing various measures to aid its struggling real estate sector.

Measures include establishing an urban real estate financing coordination mechanism and providing over 160 billion yuan or US$22.2 billion in government credit to real estate projects.

The sales area of commercial housing totaled 1.12 billion square meters (12.06 billion square feet) last year, marking an 8.5% decrease from the previous year, with the residential sales area falling by 8.2%.