China cuts benchmark lending rate to bolster economy

[superadmin]

Just days after China cut a major interest rate for central bank lending to big commercial banks, and hours after central bank officials delivered a clear signal about monetary easing through promises of opening the monetary policy toolbox wider, the country took one further step toward capital easing by cutting the loan prime rate (LPR), the de facto benchmark lending rate, both in five-year and one-year terms, on Thursday. 

Although the cuts are arranged according to loan periods, market observers said it's a sign of the government's urgent desire to boost market confidence and inject momentum into the real economy, as the country tried to achieve stable economic growth this year amid challenges including coronavirus and real estate weakness. 

Compared with drastic US policies which usually upset the global market, China's policies, which are moderate and launched step by step, are more responsible and will not lead to wild vibrations in markets, observers said. 

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