The key interest rate on the 5-year loan was reduced by 25 basis points (0.25%) to 3.95% from 4.20%. The increase in net interest earnings for commercial banks paved the way for lenders to reduce borrowing costs to support the economy.
In a Reuters poll of 27 market observers this week, 25 of them expected a cut in the interest rates on 5- year loans, but they expected a cuts of 5 to 15 basis points. This is the largest reduction in theinterest rate on loans since China updated the loan pricing mechanism in 2019.