China cuts interest rates for 1st time in 7 months

ISTANBUL

The People’s Bank of China slashed its benchmark lending rates by 10 basis points on Tuesday, in line with market forecasts.

The one-year loan prime rate, a crucial reference for corporate and household loans, was lowered to 3%, from 3.1%.

Similarly, the five-year rate, a key indicator for mortgage rates, was cut to 3.5%, from 3.6%.

These cuts marked the first reduction in rates since the central bank’s 25-basis-point cut in October, as the world's second-largest economy seeks to grow further by a series of efforts.

The decision followed the US and China's decision to lower the mutual tariffs by 115% as of May 14.

It also followed better-than-expected economic data by China, with the gross domestic product growing by 5.4% year-on-year in the first quarter.

Chinese retail sales rose below forecasts in April, indicating a slower domestic demand, while industrial output climbed above expectations, signaling that the effect of tariffs was smaller than anticipated.

After the Chinese bank's decision, the yuan was broadly stable, trading at around 7.22 against the US dollar.