China has reduced its benchmark lending rates, cutting the one-year loan prime rate (LPR) by 25 basis points to 3.10% and the five-year LPR to 3.6%, as part of broader stimulus measures aimed at reviving the economy, Reuters reports.
These cuts follow previous reductions to various policy rates last month, including a 50 basis point reduction in banks’ reserve requirement ratios and a 20 basis point cut in the seven-day reverse repo rate, marking the most aggressive stimulus since the pandemic. Since the introduction of these stimulus measures, China’s CSI300 Index has seen significant gains, increasing over 14%, although the yuan has depreciated by 1% against the dollar.
Despite slightly better-than-expected economic growth in the third quarter, concerns remain about whether these measures are sufficient to revive growth. Data revealed an increase in retail sales and industrial production, but property investment fell by more than 10% in the first nine months of the year.
Officials remain optimistic about achieving the government’s annual growth target of around 5%, suggesting further easing measures by year-end. However, some market analysts are questioning the long-term impact of these policy changes.
