The People's Bank of China on Friday reduced its one-year Loan Prime Rate (LPRs) from 4.25% to 4.20%. China introduced the LPR as its main lending rate for businesses in August, in a move designed to make interest rates in the country more market-driven. Bank lending was previously priced on a benchmark set daily by the central bank. The LPR rate is determined on the 20th day of every month. It only applies to newly issued loans. The five-year prime rate, generally used as a reference rate for new mortgage loans, was kept unchanged at 4.85%.
The largely-expected reduction in the one-year Loan Prime Rate (LPR), now at 4.20%, came after the People's Bank of China (PBOC) lowered banks' reserve requirements on Monday. It also comes shortly after the Federal Reserve cut U.S. interest rates by 25 basis points.
CURRENCY NEWS: China's yuan firmed to 7.0843 per dollar after a trim to a benchmark interest rate in China was smaller less dovish than some market players expected.
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