China’s central bank has set its newly christened benchmark lending rate slightly lower in a bid to reduce funding costs as the world’s second-largest economy grapples with slowing growth and a trade war with the US.
The People’s Bank of China on Tuesday set the revamped loan prime rate at 4.25 per cent — just 6 basis points lower than the previous level, but in line with its stated goal of bringing the rate more closely in step with its medium-term lending facility for one-year loans, which stands at 3.3 per cent.
When it announced the LPR at the weekend, the PBoC said the new lending benchmark was intended to “deepen reform of interest rate marketisation, improve the efficiency of interest rate transmission and promote reduced financing costs for the real economy”.