Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
PBoC trims five-year loan prime rate more than expected
(Sharecast News) - Rate-setters in China took decisive steps to bolster its property market on Tuesday, by implementing the first cut in its benchmark five-year loan prime rate since June. The move from the People's Bank of China (PBoC) came as Beijing worked to revitalise the country's sluggish real estate sector amid economic challenges.
While the one-year loan prime rate, which influences most household and corporate loans, remained unchanged at 3.45%, the PBoC announced a 25 basis points reduction in the benchmark five-year loan rate to 3.95%.
The decision to slash the five-year rate for February's monthly fix went further than market expectations, with most analysts anticipating a more conservative reduction of between five and 15 basis points, according to Reuters polling.
China's loan prime rates, recalculated monthly after input from 20 designated commercial lenders, typically align with the country's medium-term policy rate, which the PBoC chose to maintain for February.
The move did follow Beijing's recent reduction of reserve ratio requirements for banks by 50 basis points starting from 5 February , injecting CNY 1trn (£110bn) of long-term capital into the financial system.
"In our view, the combination of a cut to the five-year LPR today, a 25-basis point RRR cut in January, and non-moves to the one-year medium-term lending facility and LPR in recent months signals authorities' continued preference for targeted easing, and their desire to ramp up support for the property sector," said Oxford Economics lead economist Louise Loo.
"Today's move is also consistent with how we think authorities are diagnosing China's property problem, which will drive a managed 'staircase-shaped' correction path.
"[It is] Not just about housing delivery - a late-2022 to late-2023 policy focus - but also about cleaning up the excess inventory sitting on private developer balance sheets - and possibly transferring onto the government balance sheet - through a mix of monetary and fiscal easing.
"On the monetary front, we continue to expect another 25-basis point cut to the RRR in the second quarter."
According to CNBC, the Chinese property market had been going through a downturn following Beijing cracking down on developers' excessive reliance on debt for growth in 2020, which led to the bankruptcy of some of China's largest real estate firms.
Reporting by Josh White for Sharecast.com.
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity, Equity & Inclusion | Doing Business with Fidelity | Diversity, Equity & Inclusion Reports | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Security | Statutory and Regulatory disclosures | Whistleblowing policy
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.