China cuts benchmark lending rate by 10 basis points to bolster economy

China on Monday cut the market-based benchmark lending rate and a key short-term rate in a bid to bolster the real economy.

The one-year loan prime rate (LPR) came in at 3.35 percent Monday, down from the previous reading of 3.45 percent, according to the National Interbank Funding Center.

The over-five-year LPR, on which many lenders base their mortgage rates, was lowered by 10 basis points to 3.85 percent.

In addition, the People's Bank of China (PBC), the central bank, on Monday lowered the interest rate on seven-day reverse repos from 1.8 percent to 1.7 percent.

The move aims to strengthen counter-cyclical adjustments to better support the real economy, the PBC said in an online statement.

A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

The central bank's move came as the just concluded third plenary session of the 20th Central Committee of the Communist Party of China stressed that China must remain firmly committed to accomplishing this year's economic and social development goals. 

Experts expressed confidence that China remains able to achieve its annual GDP growth target of around 5 percent in 2024.

After China reported 5 percent GDP growth for the first half of 2024, some international organizations and multinational banks such as IMF and Singapore-based DBS maintained their forecast for China's economic growth this year, underscoring that global confidence in stable growth in China's economy has remained unchanged.