The People's Bank of China on Tuesday cut two key policy rates for the first time in 10 months, as the Chinese economy showed signs of stalling. The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.55 percent, while the five-year LPR was cut by the same margin to 4.2 percent.

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Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. China last cut both LPRs in August 2022 to boost the economy.

The latest rate cut comes in the backdrop of last week's two easing moves, as authorities look at propping up growth.

The Chinese central bank's move comes after the recent economic data in the past few weeks, including fixed asset investment, industrial production, trade in May and retail sales, fell short of expectations.

Last week, the People's Bank of China trimmed its one-year medium-term loan facility and also lowered its seven-day reverse repurchase rate.

On Monday Goldman Sachs Group Inc became the latest bank to cut their forecasts for China’s economy, citing limited options to boost stimulus. Analysts at Goldman lowered their estimates for China’s gross domestic product growth this year to 5.4 percent from 6 percent.

With inputs from Reuters

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First Published:Jun 20, 2023 7:26 AM IST