China announces interest rate cut the second time this year, seeking economic recovery

Recently CNN.co.jp reported the following:

中国、今年２回目の利下げを発表　景気回復図る

2023.08.21 Mon posted at 14:30 JST

 （ＣＮＮ） 中国人民銀行（中央銀行）は２１日、事実上の政策金利「最優遇貸出金利（ＬＰＲ）」の１年物を０．１ポイント引き下げ、３．４５％にした。

利下げは今年２回目。住宅ローン金利の指標となる５年物のＬＰＲは、４．２０％で据え置いた。

１年物の引き下げは予想されていたが、５年物の据え置きは驚きをもって受け止められた。

ロイター通信の調べによると、１年物についてはアナリストの大半が０．１５ポイントの引き下げを予想し、５年物はほぼ全員が少なくとも０．１５ポイント下がるとの見通しを示していた。

Translation

(CNN) The People's Bank of China (PBOC) on the 21st cut its one-year loan prime rate (LPR) rate by 0.1 percentage point to 3.45%.

This was the second rate cut this year. The five-year LPR, a benchmark for mortgage rates, remained unchanged at 4.20%.

A reduction in the 1-year rate was expected, but the decision to leave the 5-year rate unchanged was met with surprise.

Most analysts expected a 0.15 percentage point drop in the one-year rate, and nearly all expected a drop of at least 0.15 percentage points in the five-year rate, according to a Reuters poll.

So, China cuts its one-year loan prime rate (LPR) rate by 0.1 percentage point. This is the second rate cut this year to stimulate its economy. It is interesting to note that while some western countries are combating inflation by increasing interest rates while China is doing the opposite.