China lowers lending benchmarks after PBOC's surprise rate cut

China lowers lending benchmarks after PBOC's surprise rate cut

China cut benchmark lending rates at a monthly fixing on Monday, after the central bank surprised the markets by lowering a key short-term policy rate earlier in the session.

The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.35% from 3.45% previously, while the five-year LPR was reduced by the same margin to 3.85% from 3.95%.

In a Reuters survey of 36 market participants conducted last week, 23, or 64% of all respondents, expected both rates to stay unchanged.

Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages.