The benchmark interest rate for one-year loans, the benchmark for corporate loans, was cut from 3,7% to 3,65%, the People's Bank of China (PBOC) said in a statement.
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At the same time, the base rate for five-year loans, used to set mortgages, was reduced from 4,45% to 4,3%.
The situation of the Chinese economy is of vital importance for the entire world. As a major exporting and consuming country, China can heat up or slow down global economic activity. Much of the world's economic growth in recent decades is due to the expansion of the Chinese economy.
Analysts anticipated cuts in the basic interest rate, but warned that the measure may be insufficient for the recovery of the real estate sector, which according to various calculations represents 25% of Chinese GDP.
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“The five-year rate cut suggests that the PBOC is concerned about problems in the housing market,” Capital Economics highlighted in a statement.
“Property buyers with mortgages, however, will have to wait until early next year for the change to benefit them,” the note adds.
China's property market has been shaken by frustrated buyers in dozens of cities who boycotted mortgage payments as cash-strapped companies scrambled to complete units already sold.
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Chinese economic growth was 0,4% at an annual pace in the second quarter, the lowest since the start of the pandemic in 2020.
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(with AFP)
