China Cuts Key Interest Rate As Economy Wobbles

China's central bank has cut one of its key interest rates for the second time in three months as the world's second-largest economy struggles to bounce back from the pandemic, Peter Hoskins reported for BBC News.

The People's Bank of China (PBOC) lowered its one-year loan prime rate to 3.45% from 3.55%. I Photo: CGTN

The People's Bank of China (PBOC) lowered its one-year loan prime rate to 3.45% from 3.55%.

The country's post-COVID recovery has been hit by a property crisis, falling exports, and weak consumer spending. In contrast, other major economies have raised rates to tackle high inflation.

The PBOC last cut its one-year rate - on which most of China's household and business loans are based - in June.

Jun Bei Liu from Tribeca Investment Partners told the BBC that the move is unlikely to have a major impact but does indicate the Chinese government's commitment to reviving the economy.

"We will need bigger stimulus package to boost confidence and in turn drive up consumption and growth. Without it, the economy is risking faltering into deflation which will be harder to revive," she added.

Economists had also expected the bank to lower its five-year loan prime rate, which the country's mortgages are pegged to. However, it was unchanged at 4.2%. In a surprise move last week, short and medium-term rates were also cut.

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