China's one-year LPR drops Monday

China's one-year loan prime rate (LPR), a market-based benchmark lending rate, was lowered by 10 basis points to 3.45 percent on Monday, according to the National Interbank Funding Center.

The over-five-year LPR, on which lenders base their mortgage rates, remained unchanged at 4.2 percent.

The cut indicates a steady and moderate policy approach, in line with the central bank's efforts to support the development of the real economy, Ying Li, head of Financial Institutions Ratings at S&P Global (China) Ratings, told CGTN.

Bruce Pang, chief economist and head of research at JLL Greater China, said that the lower rate will help reduce financing costs for companies, further bolstering consumption momentum, and keeping investments stable.

"At the same time, the over-five-year LPR remained unchanged, reflecting that when adjusting the real estate credit policy, a balance between benefiting the real economy and risk management must be struck" said Pang.

In June, LPR for one-year and five-year tenors were both reduced by 10 basis points to 3.55 percent and 4.2 percent respectively.

(CGTN)