China has lowered interest rates in an effort to bolster the country’s slumping property market.
The Chinese central bank cut its five-year loan prime rate while leaving its one-year rate unchanged.
The five-year rate was reduced by 0.25 basis points to 3.95%, while the one-year rate was held at 3.45%. It was the first time that the five-year rate was cut since May 2023.
At the same time, China’s state-owned banks announced billions of dollars worth of loans to support struggling property developers in the nation of 1.4 billion people.
The cut to the five-year loan rate was a surprise and is the biggest reduction of that interest rate ever, say economists.
The central bank and government in Beijing are hoping the lowered rate will improve affordability for buyers by reducing mortgage rates.
The economy in China, which is the world's second largest after the U.S., depends on the property market for growth and employment.
Several major property developers in China have defaulted on their loans over the past year amid an escalating debt crisis in the sector.
There was a muted reaction to news of the rate cut in Chinese markets, with the benchmark Shanghai Composite index gaining 0.4% and Hong Kong's Hang Seng index falling 0.3%.
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