The People’s Bank of China (PBoC), China’s central bank, cut a key benchmark lending rate in another tentative sign of monetary easing as the world’s second-biggest economy grapples with a slowdown, reported the Financial Times.
The PBoC on Friday reduced its one-year Loan Prime Rate from 4.25% to 4.20%. The move failed to buoy stocks with the CSI 300 index of Shanghai- and Shenzhen-listed shares edging just 0.2% higher.
“The scale of PBoC’s easing package was somewhat disappointing to doves,” said Mizuho currency strategist Ken Cheung.
China introduced the LPR as its main lending rate for businesses in August, in a move designed to make interest rates in the country more market-driven. Bank lending was previously priced on a benchmark set daily by the central bank. The LPR rate is determined on the 20th day of every month. It only applies to newly issued loans.