The People's Bank of China cut its benchmark lending rate as expected to reduce borrowing costs for companies and prop up the economy, after it contracted for the first time in decades. The one-year loan prime rate (LPR) was lowered by 20 basis points (bps) to 3.85% from 4.05% previously, while the five-year LPR was cut by 10 bps to 4.65% from 4.75%. Most new and outstanding loans are based on the LPR, while the five-year rate influences the pricing of mortgages. The LPR is a lending reference rate set monthly by 18 banks. The move was the second cut to the lending benchmark rate this year, and the latest reduction in one of China's key lending rates.
CURRENCY NEWS: China's yuan was tad softer against the dollar on Monday, despite China central bank fixed firmer mid-point rate, as s the country's central bank cut a key rate for the second time this year to shore up the coronavirus-hit economy. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0657 per dollar, up by 0.09% from the previous fix of 7.0718.
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