SHANGHAI: China lowered its lending benchmark rate on Wednesday, as widely expected, to reduce company funding costs and shore up an economy hurt by slowing demand and US trade tariffs.

The cut was the second to a key Chinese rate this week and came a day after central bank Governor Yi Gang said Beijing would step up credit support and lower real lending rates, as pressure on the world’s second-largest economy increases.

With growth sliding to near 30-year lows and a partial trade deal with the US proving elusive, China has slowly picked up its tempo of policy easing in recent weeks, with authorities pushing banks to keep supporting cash-strapped small- and medium-sized businesses.

Wednesday’s pruning of the loan prime rate (LPR) followed China’s first cut in a short-term market rate in four years on Monday, suggesting the start of “a new easing cycle”, said Ji Tianhe, China head of foreign exchange and local markets strategy at BNP Paribas in Beijing, who says there is room for rates to go lower.

The one-year LPR, a rate set by the People’s Bank of China (PBOC) based on quotes from a panel of banks, fell five basis points to 4.15 per cent from 4.20pc in October. The five-year LPR was lowered by the same margin to 4.80pc from 4.85pc.

Published in Dawn, November 21st, 2019