Prime cut

20 September 2019 By Christopher Beddor

China has trimmed its new one-year benchmark lending rate to 4.2%. Policymakers want to boost slowing growth, but without fueling a property or credit bubble. The result is another half-step towards loosening that will disappoint those hoping for a quick stimulus.

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China cut its new one-year benchmark lending rate to 4.2% on Sept. 20, 5 basis points lower than the 4.25% rate that was set in August. The five-year Loan Prime Rate remained unchanged at 4.85%.

The People’s Bank of China said on Sept. 6 that it was cutting the amount of cash banks are required to hold in reserve by 50 basis points for all banks, with an additional 100 bps cut for qualified city commercial lenders. The move is expected to release 900 billion yuan ($127 billion) into the economy.

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