The People’s Bank of China has cut the one-year loan prime rate, one of the countries key lending rates, in an attempt to curb the loss of economic momentum, reports the Financial Times. China’s central bank cut the rate, which is widely used as a benchmark for the loans banks make to their customers, from 3.85% to 3.8%. Monday’s rate cut was the first since April 2020, when the country was grappling with the initial outbreak of coronavirus.
China’s economy, which last year recovered from the fallout of the coronavirus pandemic much quicker than other large economies, has recently faced pressure from a property slowdown, energy shortages and lingering weakness in consumer activity.
In the third quarter, gross domestic product grew 4.9% year-on-year, its slowest pace in a year. Challenges across the country’s real estate industry have intensified since then, with new home prices falling for several consecutive months and heavily-indebted developer Evergrande defaulting along with several of its peers.