From Yahoo Finance: 2025-05-19 20:07:00

China cuts benchmark lending rates for the first time since October to stimulate consumption and loan growth amid economic softening and the Sino-U.S. trade war impact. Major state banks reduce deposit rates to protect profit margins, while analysts note cautiousness in the rate cuts due to ongoing trade war negotiations. The People’s Bank of China lowers one-year and five-year loan prime rates to 3.0% and 3.5%, respectively, with the goal of easing monetary policy.

The rate cuts follow China’s biggest state-owned banks lowering deposit interest rates by 5-25 basis points, influencing smaller lenders to make similar cuts. Banking shares rise after the decision, reflecting a positive market response. Chief financial analyst Marco Sun believes the rate cuts will boost credit lending and consumption, with expectations for a wait-and-see approach from the central bank in the coming months.

Global investment banks revise China’s economic growth forecasts upwards following a de-escalation in the trade war. Analysts caution that achieving growth targets may require further stimulus measures despite the respite. Recent economic data indicates patchy growth and lacklustre trends, highlighting the need for ongoing support. Xing Zhaopeng predicts another rate cut by July to prepare for future challenges, while Nicholas Zhu anticipates prolonged low interest rates in China to support economic recovery.

Read more: China cuts key rates to aid economy as trade war simmers