Chinese banks have cut interest rates for the first time in 20 months in an effort to stem the economic slowdown in the country.
The interest rate on one-year loans to companies will rise from 3.85 to 3.8 percent, according to a statement from the People’s Bank of China. This is the first interest rate cut since April 2020. The five-year interest rate – a reference for mortgages – remains at 4.65 percent.
The rate cut means that stronger companies will be able to borrow at slightly lower interest rates.
The interest rate cut is seen as a harbinger of more monetary support. After all, the Chinese economy is under tension. A faltering real estate market, spending less by families, and sporadic coronavirus outbreaks are weighing on the world’s second-largest economy.