China slightly cuts short-term interest rates to support businesses hit by the ongoing trade war, just weeks after it also decreased banks' required cash reserves to the lowest post-crisis ratio.
The September loan prime rate was set at 4.20 percent, according to interbank funding arm of the People’s Bank of China (PBoC), slightly lower from August’s 4.25 percent. The move is expected to support the short-term needs of businesses affected by the ongoing U.S.-China trade war and a domestic slowdown.
The five-year prime rate, generally used as a benchmark for new mortgage loans, was unchanged at 4.85 percent which is in line with Beijing’s ongoing policy of keeping property prices in check.
The PBoC's short-term rate cut follows recent easing of bank’s reserve requirement ratio (RRR) by 0.5 percentage points – the lowest post-crisis level – releasing 900 billion yuan ($126 billion) of liquidity.
Last week, major central banks elsewhere also provided additional monetary easing with the European Central Bank and the Federal Reserve both reducing their benchmark rate by 0.5 percent and 0.25 percent, respectively.
