The Chinese central bank once again lowered two of its key interest rates on Monday in order to support the economy, which was weakened by a real estate crisis and the strict corona policy. Two key benchmark lending rates were lowered: the cheapest one-year interest rate that banks can offer businesses and households was cut from 3.70 percent to 3.65 percent; the five-year interest rate, which is the benchmark for mortgage loans, was cut from 4.45 percent to 4.3 percent.
The measure is intended to encourage banks to lend more at lower interest rates, which in turn should boost the economy. Both interest rates are now at historic lows. The one-year rate was last lowered in January and the five-year rate in May.
Last Monday, the central bank surprisingly lowered two key interest rates in order to increase liquidity for the banks. Before the central bank’s announcement, the Chinese Bureau of Statistics released relatively poor figures for manufacturing and retail in July.
China’s economy grew just 0.4 percent year-on-year from April to June. That was the weakest rise since the beginning of 2020, when the corona pandemic paralyzed the Chinese economy and GDP shrank by 6.8 percent. The declared goal of the Chinese leadership is an increase in gross domestic product of 5.5 percent this year.
