Investing.com-- The People’s Bank of China unexpectedly cut its benchmark loan prime rates further into record-low territory on Monday as recent signs of a slowing economic recovery drew more calls for stimulus.
The PBOC cut its one-year loan prime rate to 3.35% from 3.45%, ducking expectations that it would keep the rate unchanged.
The five-year LPR, which is used to determine mortgage prices, was cut to 3.85% from 3.95%.
The cuts come just a week after softer-than-expected gross domestic product data for the second quarter ramped up concerns over slowing economic growth. The reading, which also followed a slew of middling economic reports from China, drew increased calls for more stimulus measures from Beijing.
Chinese officials had also promised more stimulus during the Chinese Communist Party’s Third Plenum last week. Earlier on Monday, the PBOC cut its seven-day reverse repo rate to 1.7% from 1.8%, further loosening monetary conditions in the country.
The LPR is determined by the PBOC based on considerations from 18 designated commercial banks, and is used as a benchmark for lending rates in the country.
The five-year rate in particular is tied closely to the property market, which has been struggling with a prolonged downturn over the past four years. The one-year rate is used to determine most new and outstanding loans.