PBOC Cuts Benchmark Lending Rate as Expected

China's central bank PBOC revised its benchmark lending rate, LPR, lower in a bid to reduce financing costs for businesses as it tries to

PBOC Cuts Benchmark Lending Rate as Expected

China’s central bank PBOC revised its benchmark lending rate, LPR, lower in a bid to reduce financing costs for businesses as it tries to grapple with the economic fallout of the coronavirus outbreak. The one-year loan prime rate (LPR) has been cut from 4.15% to 4.05%, as was widely expected by economists.

Earlier this week, the PBOC had announced a cut of its medium-term lending rate as well, which would further lift some pressure off businesses trying to recover from the prolonged shutdown as a result of the outbreak. Markets are anticipating that the government will unveil more fiscal stimulus and monetary easing measures to prop up its weakening economy as it tries to restore normalcy in productivity.

Latest estimates by economists expect China’s Q1 2020 GDP to fall to 4.5% from 6.0% in the previous quarter. The worst case scenario pegs evening growth to fall to as much as 3.0% on account of the virus.

Things appear to be looking up for now with China reporting a significant reduction in the number of infected cases over the past few days. However, the death toll has crossed 2,000, making it a more severe epidemic than the 2002-03 SARS pandemic.

ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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