China cuts benchmark lending rates for the first time in 7 months in Beijing’s growth push

China cut its key lending rates by 10 basis points on Tuesday, as Beijing ramps up efforts to boost its economy at a time when trade tensions threaten to derail growth.

The People’s Bank of China trimmed the 1-year loan prime rate to 3.0% from 3.1%, and the 5-year LPR to 3.5% from 3.6%.

This marked the first reduction in rates since the central bank’s 25-basis-point cut in October, as Beijing intensifies efforts to shore up its economy.

The benchmark lending rates — normally charged to banks’ best clients — are calculated monthly based on designated commercial banks’ proposed rates submitted to the PBOC.

The 1-year LPR influences corporate and most household loans in China, while the 5-year LPR serves as a benchmark for mortgage rates.

The rate cuts came as a slew of state-backed commercial lenders moved to reduce their deposit rates by as much as 25 basis points earlier Tuesday in an effort to protect their net interest margin, paving the way to lower key lending rates.

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