China's LPR sees cut in May to further boost market confidence

China's one-year loan prime rate (LPR), a pivotal benchmark for market-based lending, was cut by 10 basis points to 3.0 percent on Tuesday.

Similarly, the over-five-year LPR, often used to determine mortgage rates, experienced the same reduction, being set at 3.5 percent, according to the National Interbank Funding Center.

This marks the first reduction in rates since the central bank's 25-basis point cut in October and follows the May 7 announcement by Pan Gongsheng, governor of the People's Bank of China, to cut interest rates by 0.1 percentage point. The reduction in interest rates is expected to lower the borrowing costs for businesses and individuals, which is conducive to boosting market confidence.

On May 19, data released by the National Bureau of Statistics (NBS) showed that among 70 large and medium-sized cities, the sales prices of commercial housing in all cities remained flat or decreased slightly month-on-month in April, while the year-on-year decline continued to narrow.

On the same day, Fu Linghui, a spokesperson for the NBS, said that transactions in some first- and second-tier cities had resumed, and house prices were generally stable. 

(Cover image via VCG)